96% of PAX and BUSD Reserves in Cash & Cash Equivalents, Reports Custodian

96% of PAX and BUSD Reserves in Cash & Cash Equivalents, Reports Custodian

Paxos also blasted Tether (USDT) and Circle (USDC) for claiming themselves to be regulated while having 75.85% and 61% in cash and cash equivalents that are “backed substantially by corporate debt obligations.”

After USDC disclosed its reserves backing this week, Paxos has released the composition of the reserves of its stablecoins, PAX and BUSD.

Paxos, PayPal’s broker-dealer, is the custodian for both PAX and Binance’s stablecoin BUSD. As of June 30, 96% of their reserves have been cash and cash equivalents, with the remaining 4% in US Treasury bills maturing in October.

Here, cash includes cash balances held in USD at insured depository institutions and

Cash equivalents are short-term, highly liquid investments with maturities of 3 months or less.

In its disclosure, Paxos Chief Compliance Officer Dan Burstein shared his displeasure and exasperation with the leading stablecoins USDT and USDC claiming to be regulated.

“Neither USDC nor Tether is a regulated digital asset, for the simple reason that neither token has a regulator. In fact, neither USDC nor Tether tokens are ‘stablecoins’ in anything other than name. These tokens are backed by illiquid and risky debt obligations – a critical weakness that no prudential regulator would allow to exist as this creates undue risk for their customers.”

USDT is the leading stablecoin with a market cap of $62.4 billion, capturing 58% of the market share, while USDC has a 24.3% market share with nearly a $27 billion market cap.

PAX has a market cap of $907 million, while BUSD accounts for a 10.8% market share with an $11.37 billion supply.

According to Burstein, only Paxos Standard (“PAX”), Binance Dollar (“BUSD”), and Gemini Dollar (“GUSD”) are regulated dollar-backed stablecoins by the New York State Department of Financial Services (“NYDFS”).

He further argued that USDC and Tether’s reserves are backed substantially by corporate debt obligations, which means customers are not protected due to illiquidity risk, credit risk, and interest rate risk.

In the case of USDC, he said, reserves are held on its issuer Circle’s balance sheet meaning, they can use consumer funds to pursue risky high-yield investments for its financial gain.

“The principal value of regulatory oversight is to ensure that the reserves consist of real, liquid, accessible dollars — if neither USDC nor Tether can fulfill these promises, can they even be considered dollar-backed stablecoins?”

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Author: AnTy

Bitcoin Market State: Investors Holding Steady But Volatility to Remain Under Pressure Until Q3 End

The macro-environment also remains in favor of Bitcoin, for now, while the CBDCs aiming for “absolute control” will only drive the cryptocurrency adoption further.

There isn’t much happening with the price of Bitcoin, which continues to remain boring as it trades sideways between $30k-$40k.

As Bitcoin’s price remains range-bound, Guggenheim Investments Chairman Scott Minerd is back with his bearish takes, which could only be seen as his attempts to scoop up cheap coins for himself, although to the public, he is saying that he isn’t in a hurry to buy BTC right now.

Up until now, Minerd was calling for $20,000, but his latest target has now fallen to $10,000.

“When we look at the history of crypto, and we look at where we are, I mean, I really do believe this is probably a crash, and you know a crash would mean we’d be down 70-80% which, let’s just say that’s between 10 and 15 thousand,” he said in an interview with CNBC.

Minerd’s bearish calls started coming in January this way, at the end of which Guggenheim was approved by the SEC to hold GBTC, right after his call for $400,000 per BTC in December.

“Put it this way, I wouldn’t be in a hurry to buy Bitcoin, and I don’t see any reason to own it right now.”

“If you’re going to be a speculator, speculate that it’s heading lower.”

The biggest bearish driver to BTC right now, according to many market participants, is the big Grayscale Bitcoin Trust (GBTC) coming in the second half of this month. However, as we reported, GBTC unlocks that have been going on throughout this year have already impacted the Bitcoin price. Now, it would be either neutral or somewhat bullish.

“The fact that the market is so focussed on something like this just shows the lack of real catalysts or market moving events right now,” noted QCP Capital.

This strengthens their conviction that volatility will remain under pressure until mid-late Aug, followed by a rally possibly on the back of the EIP-1559 mainnet implementation and then the larger Q4 Wave 5 selloff on the Fed’s taper, it added.

Interestingly, Grayscale’s inventory stopped growing around the time Purpose Bitcoin ETF launched in Canada, which garnered huge interest at the time and continues to accumulate Bitcoin in its fund.

The 3iQ CoinShares ETF launched in late April also sees its holdings growing and is similar in size to the Purpose ETF.

In addition, the macro environment is still in Bitcoin’s favor. This week, the European Central Bank raised its inflation goal to 2% and said it may let it overshoot the target for a while.

The ECB said when rates are close to their limit like they are now, the economy will need an “especially forceful” monetary stimulus that could see inflation moderately above target.

“The new formulation removes any possible ambiguity and resolutely conveys that 2% is not a ceiling,” President Christine Lagarde told reporters in a press conference. “What we want to do is to avoid the negative deviation that will entrench inflation expectations.”

Not to mention, with a central bank digital currency (CBDC), the banks are aiming for increased control. Agustin Carstens, Bank for International Settlements (BIS) chief said,

“We don’t know who’s using a $100 bill today, and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”

This increased surveillance from the top could further lead to a rise in the adoption of cryptocurrencies like Bitcoin, which offer privacy, anonymity, and are censorship-resistant.

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Author: AnTy

Citigroup’s Richest Clients Can Now Trade Crypto; Also Helps Invest in Stablecoins, NFTs, & CBDC

Citigroup’s Richest Clients Can Now Trade Crypto; Also Helps Invest in Stablecoins, NFTs, & CBDC

Citigroup is finally coming around on cryptocurrencies.

The Wall Street giant now allows its richest clients to bet on crypto as part of a new digital assets group inside its wealth management unit.

This wealth management unit has been in the works ever since Citigroup formed the division earlier this year, and more recently, it has been focused on building out a series of wealth management hubs across Europe and Asia.

Under Citigroup’s crypto plan, the new group will help clients invest in cryptocurrencies, stablecoin, non-fungible tokens (NFTs), and central bank digital currencies (CBDCs), according to the memo.

The new effort will be led by Alex Kriete and Greg Girasole, who will serve as liaisons to “all other business groups at Citi who are expanding into this rapidly emerging space also.”

“They will be responsible for developing our future product capabilities, client delivery mechanisms, and thought leadership around all digital assets,” said Iain Armitage, Citigroup’s global head of capital markets for its private bank, and Rob Jasminski, who oversees the bank’s investment management arm globally, in the memo.

The bank is forming the unit as investor demand for crypto assets continues to soar and its rivals like Goldman Sachs and Morgan Stanley also start offering crypto-related services to their clients.

The newly formed unit comes just weeks after the CEOs of the six biggest US banks were grilled by Congress over their ties to cryptocurrencies. At the time, Citigroup chief executive Jane Fraser said her bank was taking tentative steps in the crypto space.

“We proceed with great caution here,” Fraser said.

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Author: AnTy

PBoC Talks Crypto ‘Hype’ with Banks and Institutions & Prohibits Use of Their Services

They will also increase the investigation and monitoring of customers, including exchanges and OTC dealers and capital transactions, and will take immediate action against those still involved because crypto trading “disrupt normal economic and financial order” and “infringe people’s property safety.”

  • The central bank of China summoned banks and payment institutions to talk about the speculation issues related to cryptocurrencies.

The People’s Bank of China met with the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Postal Savings Bank of China, Industrial Bank, Alipay, and others and ordered them not to participate in virtual currency-related business activities.

The relevant departments of the People’s Bank of China pointed out that virtual currency trading activities disrupt the normal economic and financial order, breed the risks of illegal cross-border transfer of assets, money laundering, and other illegal and criminal activities, and seriously infringe the people’s property safety.

All banks and payment institutions are now asked to strictly implement the “Notice on Preventing Bitcoin Risks” and “Announcement on Preventing Token Issuance Financing Risks” and other regulatory requirements.

Banks and institutions are not to provide account opening, registration, and registration for related activities such as trading, clearing, and settlement.

They are to comprehensively investigate and identify virtual currency exchanges and over-the-counter (OTC) dealers’ capital accounts and cut off the payment link for transaction funds.

Furthermore, they must analyze the capital transaction characteristics of virtual currency trading hype activities, increase technical input, and improve abnormal transaction monitoring models.

Amidst this, the price of Huobi Technology’s shares rose, which according to local publication Wu Blockchain, could be due to the central bank’s “relatively mild” action.

Before PBOC’s statement came, the Agricultural Bank of China issued its own on Monday stating that it prohibits the use of its services for virtual currency transactions and related activities. Now, Alipay and others have also issued their related statements.

The decision has been made in accordance with the recent guidance from the relevant departments of the People’s Bank of China and the meeting of the Financial Committee of the State Council.

According to the statement, the third-largest bank in China prohibits customers’ access involving virtual currency transactions and will increase the investigation and monitoring of customers and capital transactions.

If customers are still involved, the bank will take measures against them immediately, including suspension of account transactions and termination of customer relationships. The translated version of the notice reads,

“In order to protect your legitimate rights and interests and the safety of funds in your account, please actively cooperate with our bank’s due diligence work, assist our bank in fulfilling its legal obligations, and crack down on illegal and criminal activities involving virtual currency mining and fund transactions.”

The bank is further urging customers to be on high alert to the risk associated with virtual currency-related business activities and to beware of being deceived.

While most banks in China released a similar notice in 2014 to stop customers from trading cryptos, this time is different in three regards. As per Wu Blockchain, the latest notice clearly shows the requirements of the central bank, requiring an investigation of past behavior and reporting that to the government.

On the negative side of things, China doesn’t seem to be done with its crackdown on crypto. On the positive side, “meaningful reversal in global markets just now, with equity futures doing a 180 turnaround and bonds giving back all overnight gains,” said trader and economist Alex Kruger.

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Author: AnTy

Bitcoin Network Can Start Recovering with Hash Rate Dumped 50%, Chinese Miners Already Migrated Overseas

Many small and medium-sized operations in China are also not affected. The upside further means the path to recovery is faster, and miner capitulation usually represents the best buy signals in Bitcoin history.

Bitcoin hash rate dropped to 91.2 Th/s over the weekend, a level last seen in early November, representing a decline of 47% from its all-time high of 171.4 Th/s on May 13. As of writing, the hash rate is back above 104 Th/s.

As a result, block time has reached above 14 minutes, the same as in mid-April. Difficulty meanwhile is at 19.93 trillion last seen in January, after the recent negative adjustment. Bitcoin mining profitability is still at 0.226 per day for 1 THash/s, at late January levels.

The latest drop came after Bitcoin mining farms in Sichuan were closed on Sunday. Central and provincial government-owned power companies were ordered to immediately stop electricity to crypto mining projects.

Sichuan is 90% renewables powered, and about a year and a half ago, it represented more than 50% of the Bitcoin network.

According to an estimate by the University of Cambridge, about 65% of the world’s Bitcoin mining took place in China as of April 2020.

According to a Communist Party-backed Global Times report, this closure of so many Bitcoin miners in the province has resulted in more than 90% of China’s Bitcoin mining capacity being shuttered.

Many small and medium-sized Bitcoin mining farms in China, however, haven’t been affected, and neither has Ethereum, Filecoin, and Chia mining.

Additionally, new pools such as Foundry USA launch now account for more than 7% of the global network and have entered the top 10 mining pools list.

China’s clampdown helped ViaBTC temporarily become the world’s largest bitcoin mining pool. Its founder Yang Haipo said for over two years, its mining pools and other businesses have begun to resolutely take the international route and de-sinicize.

“Institutional miners had already started migrating overseas from China as early as March,” said Sino Global capital. And expecting more bans came from the officials, “Chinese miners accelerated their process of migration to other countries.”

Kazakhstan AIFC officials are also looking for Chinese miners as they have power facilities with a capacity of 1,685 MW, which can help establish a managed mine within 3-4 weeks. Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX said,

“Longer term most see hashrate moving out of China as positive but in the near term may have/has already resulted in inventory sales.”

China’ mining shutdown is leading to a real drop in hash rate and may cause a difficulty adjustment and perhaps even slightly slower blocks for a while, “but it’s not yet that big relative to the last 3 years (see below). And we’d prefer this to a firewall attack,” said Balaji Srinivasan, former Coinbase CTO, and General Partner at Andreessen Horowitz.

In a separate tweet, Srinivasan noted that Bitcoin mining is actually no longer in the exponential growth phase. He added,

“Hashrate isn’t increasing 100X in a year, hardware now lasts longer, opex/capex is more predictable, and tools for bounding risk now exist. So it’s easier to mine anywhere.”

Charles Edwards of Capriole Investments noted that we are now seeing the worst-case scenario for a China mining ban played out. “The brunt of the force of the China mining bans has been dealt. We are at a point where the network can now start to recover,” he wrote.

The upside here could mean the path to recovery is faster, given that mining is still largely profitable and that this capitulation wasn’t caused by genuine business collapse, said Edwards adding, Miner capitulation usually represents the best buy signals in Bitcoin history.

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Author: AnTy

DeFi Bleeding: Fundamentals Don’t Matter But Particular Sections of The Market Are Still Seeing Growth

DeFi also continues to bleed against ETH, but active strategies and an active rotation into stablecoin farms do outperform ‘buy and hold’ Ether.

Cryptocurrencies continue to get sold-off.

And decentralized finance (DeFi) isn’t exempt either. The market cap of the entire DeFi sector has fallen just under $76 billion, down from about $144 billion peak in mid-May due to the prices of DeFi tokens crashing 20% to 75% in the last 30 days.

DeFi, much like all the other altcoins in the market, remains at the mercy of Bitcoin. While it may seem like initially that the crypto assets are decoupling, that is not the case, at least not yet.

“Typically, new and less well-known tokens don’t have institutional support from a liquidity perspective. When majors — Bitcoin and Ethereum — are down significantly like today, DeFi products like these will have more violent price actions,” said Wilfred Daye, chief executive officer of Enigma Securities.

One of the reasons could be that everyone doesn’t understand DeFi or its fundamentals just yet.

“Fundamentals don’t matter because not enough people understand it and is willing to put $ on it, on the other hand, momentum following has always worked,” noted trader CL of eGirl Capital.

DeFi tokens are not only falling in USD terms but also bleeding against ETH.

DeFi is actually worse off compared to Ether in terms of lower returns, higher volatility, longer drawdowns, and larger maximum drawdown.

“Of course, defi would be underperforming ETH – the defi/eth bear market has been in play since last year at some point in the future, I would expect select defi to strongly outperform ETH, but that might not be so soon,” noted Degen Spartan of eGirl Capital.

While DeFi’s “returns have been lackluster for idle buy and hold strategies,” data provider Glassnode found in its latest report that active strategies and an active rotation into stablecoin farms have outperformed buy and hold ETH.

“While returns in DeFi governance tokens have been underwhelming at times, access to yield on assets an investor would otherwise choose to hold regardless is incredibly powerful,” it said.

Still, some metrics are showing strength in the DeFi market. As we reported, total value locked (TVL) in DeFi blue-chips, Yearn, and Aave has already surpassed ATH despite the prices more than halved.

Lending activity in the market is also seeing growth as people look for lucrative yield farming opportunities in the absence of price action. Outstanding DAI is also at ATH of $5.36bn the same as Aave, which hit $6.27 bln high just this week.

Also, while much like on centralized exchanges (CEX), volume on decentralized exchanges (DEX) is falling off a cliff, just last month, total DEX volume hit a new record of over $173 billion, up 109.5% from the previous month and 67,460% from a year back.

“Halfway thru June, DEX volumes on pace for 3rd largest month ever (already > EVERY month in 2020), DEX’s are stealing market share from CeFi,” noted Jeff Dorman, CIO at digital asset management firm, Arca.

This is just short-term, and “a week or two of data doesn’t invalidate long-term trends in volumes, revenue and cash flows,” he added.

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Author: AnTy

Reddit Co-founder Holds ‘Quite A Bit’ of Ethereum, But Also Invested in Solana, Polygon, & Optimism

Reddit Co-founder Holds ‘Quite A Bit’ of Ethereum, But Also Invested in Solana, Polygon, & Optimism

Alexis Ohanian, whose Twitter name bears “eth,” thinks “Ethereum has…got the most to prove.” However, he is just as interested in meme stocks which are not “sound” investments but not going anywhere, and markets have to adapt to this.

Reddit co-founder Alexis Ohanian is long Ethereum, the second-largest cryptocurrency, which he defines as “ultrasound money.”

He recently raised $150 million for a venture fund, the first one launched by his new firm Seven Seven Six. The new fund has invested in 17 startups to date, including the Bitcoin-based shopping rewards program Lolli and the trading platform Pipe Technologies.

Ohanian, whose Twitter name bears “ETH,” is confident in the potential of digital currencies to create big and cutting-edge companies. He was an early investor in the largest US crypto exchange Coinbase. In a recent interview with Bloomberg, he said,

“There’s a tipping point now that’s happened where enough people have bought in that it’s not going away.”

While he holds some Bitcoin, it is Ether that he holds “quite a bit.”

This is because, “I think Ethereum has…got the most to prove,” Ohanian told CNBC in an interview, adding: “There are so many interesting applications, NFTs are just the start of what’s getting built on top of the Ethereum blockchain.”

While Ether dominates his portfolio, he revealed on Tuesday that he is also “very intrigued” by other cryptocurrency projects, viz. Solana (SOL), Polygon (MATIC), Filecoin (FIL), Origin Protocol (OGN), Ethereum scaling solution Optimism, and Helium (HNT).

Besides noting their progress and user growth in the fast-pacing crypto space, Ohanian is also investing in these crypto projects.

“Every single week there’s a new story happening at the intersection of Community and Capital; technology is rapidly accelerating new financial markets: from crypto to trading cards to NFTs.”

According to him, the advantages of the new technology, especially ‘digital money,’ far outweigh the risks. And he is expecting the US to embrace this new technology instead of hindering its growth with regulations.

“I would hope that our government and regulators would lean into the strengths so that the US can keep an innovation advantage as decentralization massively levels the global playing field.”

Ohanian is just as interested in meme stocks as he is in cryptocurrencies and invested some personal funds in GameStop. “Full disclosure I have shares, I’ve held shares for a minute now,” he said of GME.

While these meme stocks are not really “sound” investments, neither the social media nor the retail traders are disappearing. “In fact, the opposite is happening, and the new stock market (and all markets) need to adapt to this,” he tweeted.

“We’ve crossed a Rubicon here with retail investors, there’s no going back now that everyone has access to information, real-time conversations, and one-click trades from their phone — it’s only going to increase.”

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Author: AnTy

NYDIG CEO: We’ll See an ‘Explosion’ in Bitcoin-Driven Financial Innovation in Banking & Insurance

Ross Stevens also revealed that he had a meeting with the heads of three of the world’s largest central banks about Bitcoin and inflation. He believes that we could see a central bank adopting the bitcoin standard or purchasing BTC as a reserve asset in the next 12 months.

“Bitcoin is life insurance” is how Ross Stevens, founder, and CEO of NYDIG, a Bitcoin management company, which is the subsidiary of $10 billion asset manager Stone Ridge, defined the cryptocurrency in his latest interview.

Bitcoin, according to him, is a payout in the form of freedom and dignity. And when one is poor, and all they have is fiat, then “that’s a melting ice cube of value” as the Federal Reserve continues to print money.

And this has been through the thoughts of “exacerbation of wealth inequality, profound unfairness of central bank activities,” that Stevens “saw the awesome power of bitcoin.”

NYDIG bought a bunch of bitcoin way back when no one knew about it and held it all the way through. But in 2020, they bought more bitcoin than the previous five years combined and are “on a pace to buy even more this year.”

This is because the company sees Bitcoin as a “peaceful weapon of choice against central bank driven time theft.”

The firm basically went all-in in 2017, and “it had profound effects on our company,” said Stevens adding,

“if you think about that denominator of fiat money just never-ending and expanding, that means necessarily that bitcoin gets more and more valuable.”

Bitcoin is the “first store of value in human history whose supply is completely impervious to any amount of increased demand,” he said.

Cash No Longer An Asset But A Liability

As we have been since last year, ever since the Fed implemented ultra-loose monetary policy, the value of the currency took a hit, propelling companies to see Bitcoin as a treasury asset, a replacement to the cash.

“Cash is no longer an asset; it is a liability,” said Stevens, and as such, companies have to decide what to do with their reserves.

“For companies like Stone Ridge and others that have adopted the bitcoin standard versus companies in their industries that have not, the results are profound, and part of the key is a shift in mindset,” which is that “bitcoin is not vulnerable,” like fiat and not subject to the whims of human frailties like decision making, he added.

This means, if you are not long bitcoin, you are short bitcoin, which is “not going away.”

Others also realize it, and that’s why NYDIG is “seeing uptake from kind of all spectrums of financial services, all spectrum of investors.”

“We’re At A Time Of Great Transition”

Amidst the growing interest for bitcoin, the strangest pairing in the most active folks is millennials and life insurers. What they have in common is that “they have the longest fiat denominated liabilities basically in the world,” said Stevens.

“What you will see over the next 12 to 24 months is nothing short of an explosion in bitcoin-driven financial innovation in the banking sector and the insurance sector.”

The problem is that people don’t feel safe with trusting their financial solution, and NYDIG is partnering with them to solve this. And the beginning of the baby steps of a rollout would be seen in Q4 with 2022 as “the year of bank after bank after bank enabling their customers to buy bitcoin,” get BTC rewards on credit cards and receive interest in it as well.

As for fear and opposition from central banks on bitcoin, Stevens revealed that he is meeting with the top officials who want to understand this asset class. “We’re at a time of great transition,” he said.

Steven didn’t share the name of the officials but said that they had a four-hour-long discussion:

“This past Saturday, the heads of three of the largest central banks in the world wanted to talk about inflation and bitcoin with me.”

But one topic he thinks about is when a country will change their legal tender laws to adopt the bitcoin standard, or a central bank would purchase bitcoin as a reserve asset. According to him, there is a 50-50 chance this would happen, and his contemplation is that it will happen in the next 12 months, he said.

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Author: AnTy

SHIB Token Is Sending Ethereum Gas Prices Higher

The Dogecoin knockoff, up 30,120% in the last four days, is also the one behind Ethereum co-founder Vitalik Buterin’s $8 billion fortune.

Ethereum gas fees are back to skyrocketing.

The gas prices calmed down and fell to about 40 Gwie earlier this month after the Berlin hard fork went live in mid-April, layer 1 solutions like BSC and Solana (SOL) gained traction, and layer 2 solutions like Polygon (MATIC) started to see usage.

Average gas prices are currently 150 gwei, as per Blockchair.

This has the average transaction fees on the network going to $30 after falling under $8 on May 2nd, but we have yet to climb to the late February level of about $43.

The USD rate has been on the spike as the price of Ether made a new all-time high today at $4,175.

However, this has been in line with the second largest network’s growing usage as transaction count exceeds 1.7 million, up from a 2017 peak high of 1.4 million. On May 9th, it reached the height of 1,716,600, only to fall just under 700k today.

Since last month, transaction volume has also been strong, seeing a significant jump last week, from 7.1 million on May 6 to nearly 42 million on May 8. Today, it is back to 3 million ETH.

According to Lex Moskovski of Moskovski Capital, the surge in gas prices has been due to the SHIB token.

“Ethereum gas price is skyrocketing due to TikTok influencers shilling SHIB token in anticipation of a DOGE pump. Currently, the token’s contract is the 4th most used right after Uniswap’s and Tether’s,” he noted.

Interestingly, the Dogecoin knockoff is the token behind Ethereum co-founder Vitalik Buterin’s $8 billion fortune. Buterin actually received 50% of the SHIB token supply from the token’s developers over the past year.

Shiba Inu is a canine-themed meme token inspired by Dogecoin (DOGE), which is up 30,120% in the last four days and is currently trading at $0.00003054.

And Buterin is its highest holder with 505 billion SHIB, which is now worth more than his $1.3 billion in ETH.

Buterin, however, is in no way related to the cryptocurrency. Moving 50% of the coin’s supply to Buterin was actually the SHIB’s anonymous developers’ decision to remove them from circulation, as shared in the cryptocurrency’s white paper or “woofpaper.”

While the community is cautious and feels Buterin may rug them, “Will he do it? Certainly not. There’s no incentive for him to tarnish his reputation for 200 ETH,” tweeted WARONRUGS back in January.

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Author: AnTy

Stablecoins Facilitated $1 Trillion in Transaction Volume in Q1 2021

Stablecoins Facilitated $1 Trillion in Transaction Volume in Q1 2021

Stablecoin monetary base is also growing, on track to hit $100 billion after more than doubling so far this year.

Total stablecoin supply has nearly hit $80 billion. Starting the year just under $29 billion, these cryptos or fiat pegged stablecoins added about 33.33 billion to its supply in Q1 of 2021.

USDT remains the dominant stablecoin with a $51.86 billion market cap while doing 3.4x of bitcoin volume at over $68 billion, as per Messari. This week, the largest US exchange Coinbase announced support for Ethereum-based USDT.

Although USDT is still the king, its dominance is gradually decreasing over time.

USDC, BUSD, and DAI were the quarter’s biggest winners, growing their share to 17%, 6%, and 5%, respectively.

With a market cap of $10.85, USDC comes in second place, doing only a fraction of USDT’s volume at $2.3 billion.

Binance’s BUSD is also gaining momentum, as it records almost $10 billion in volume while having a market cap of $5.25 billion. DAI is a $3.58 billion market cap stablecoin handling $560 million in volume.

Overall, stablecoins facilitated $1 trillion in transaction volume in Q1 2021, which is more than the previous four quarters combined, noted Ryan Watkins, a researcher at Messari.

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Stablecoins had an incredible quarter, with their monetary base continuing to rise at an accelerating pace in line with the growing adoption.

This adoption is for a number of reasons including stablecoins being easy to accept as payments. These programmable digital currencies “allows developers to trivially build with them and deploy applications with global distribution.”

Moreover, they run on global public infrastructure that operates 24/7/365 while offering users stronger autonomy, privacy, and interoperability qualities than existing payments solutions which require KYC and often restrict access, said Watkins.

In the stablecoin realm, Facebook’s fiat-backed project, Diem Association is aiming to launch a pilot with a single stablecoin pegged with USD later this year. First proposed in June 2019 with the name libra, the project has received opposition from regulators around the world.

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Author: AnTy