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🏛 Coinbase Braces for SEC Action as Regulatory Crackdown on DeFi Intensifies
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Aave, an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.
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SUED Less than a week after news broke that the U.S. Securities and Exchange Commission was investigating Uniswap, Coinbase, the publicly traded crypto exchange that’s become a bellwether for the burgeoning industry, said it expected to be sued by the agency in connection with its forthcoming offering, Coinbase Lend.
WELLS NOTICE “Last Wednesday, after months of effort by Coinbase to engage productively, the SEC gave us what’s called a Wells Notice about our planned Coinbase Lend program. A Wells Notice is the official way a regulator tells a company that it intends to sue the company in court,” Paul Grewal, the company’s chief legal officer, wrote on the Coinbase blog on Sept. 7.
STABLECOIN Coinbase Lend was the platform’s bid to join the expanding market for crypto-based loans and debt products. The program planned to offer customers a 4% interest rate on deposits of the stablecoin USDC, which was created by Circle in collaboration with Coinbase. Customers’ deposits would be used to make loans to borrowers, who would pay them back with interest.
ATTRACTIVE The structure is similar to Compound Treasury, which has been designed to integrate smoothly with fintech products and offer attractive interest rates with a user experience similar to a conventional savings account.
NEWS Crypto markets continued to swoon in mid-morning trading New York time Wednesday, with top DeFi names such Ethereum and Solana skidding more than 8% in the last 24 hours.
SLIDE The sudden slide this week caught investors by surprise after a glorious run in August saw Bitcoin and ETH reclaiming much of the ground they lost in the May bear market. Bitcoin was trading at $46,513, down 9% in the last 24 hours, this morning, and ETH was bouncing around $3,425, according to data from CoinGecko.
SUMMER After a buoyant summer for crypto markets, futures funding rates show that traders continued to press their bullish bets, resulting in a cascade of liquidations triggered by a bout of profit-taking. According to bybt, nearly $4B in leveraged positions were liquidated in the past 24 hours.
TLDR OpenSea better watch its back. Crypto investors have known for weeks that FTX, the offshore exchange that handles about $40B in daily trading volume, was spooling up an NFT minting operation. Then word came early this week that the Hong Kong-based platform was going to enable its customers to withdraw NFTs from FTX on either the Ethereum or Solana blockchains.
SOLANA “We are working directly with creators of top collections on Solana and Ethereum to ensure that our marketplace meets their needs, and ensures authenticity and proper curation of these collections in our store front,” tweeted Brett Harrison, president of FTX US, yesterday.
LOWER COSTS That’s no small thing. Thanks to its high-speed processing and lower costs, Solana has been a red hot player this year — its token SOL has tripled in the last 30 days and now sports a market capitalization of $47.5B, according to CoinGecko data.
NEWS Staking assets on a blockchain helps to secure the network, but losing that liquidity can be painful for traders and investors. So the team behind the derivatives protocol, Lido, created a staking derivative that allows investors to stay liquid while also supporting the security of the networks they rely on. So far, Lido has enabled almost $6B to be staked on Ethereum 2.0 and almost $2B of LUNA to be staked on the Terra blockchain.
SO WHAT In Sept. 7, Chorus One, a development partner with Lido, announced via a statement that it would bring liquid staking to the Solana network. Staking Solana’s native SOL token currently earns 8% in inflation rewards annually, for now. While users on Lido will sacrifice 10% of that inflation in fees the platform takes, they will be able to remain liquid while earning yield.
Short-selling with DeFi Dad
👨🏻🏫 Defiant Degens: How to Earn Future BETA Tokens Lending, Borrowing, and Short-Selling with Beta Finance
This is a weekly tutorial on the most compelling opportunities in yield farming, written by our friend DeFi Dad, an advisor to The Defiant and Head of Portfolio Support at Fourth Revolution Capital (4RC).
OVERINFLATED Background on Protocol: Crypto markets have always struggled to manage overinflated token prices thanks to an abundance of ways to go long and go short. The resulting volatility can be detrimental to attracting new participants whether retail or institutional.
SHORTING Despite the viral uprising against hedge funds shorting the stock market (ie GameStop saga), the truth is every market needs a counter-balance to buying pressure, including the DeFi markets. In case you’re unfamiliar with how shorting works, it’s when you borrow an asset to sell now and then buy it back later at a lower price. Just like in traditional global markets, we need new permissionless and trustless DeFi products to short tokens and help mitigate unrelenting upward pressure on the markets.
BETA About two weeks ago, Beta Finance launched as a new protocol on Ethereum for permissionless lending, borrowing, and short-selling. What’s most novel about Beta is the ability to open a short position more easily, in less time, and eventually with any token. To open a short position in DeFi would normally require quite a bit of work, if you check out the diagram below.
Crypto exchange Coinbase CEO Brian Armstrong responded Tuesday evening to planned enforcement by the U.S. Securities and Exchange Commission pertaining to the firm’s recently announced yield-generating product.
The United States Securities and Exchange Commission has reportedly threatened to sue Coinbase over a crypto yield program it deems as a security.
On August 31, 2021, Arbitrum went live on mainnet! This means it’s available to migrate funds and begin using the many DeFi apps that have already launched on the Layer 2 Rollup scaling solution.
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🧑💻 ✍️ Stories in this newsletter were written by Brady Dale, YYCtrader, and edited by Bailey Reutzel and Edward Robinson. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($15/mo, $150/yr