RESEARCH
BEQUANT Crypto&Coffee
Bitcoin and Ethereum remained well within the recent range over the weekend, with Bitcoin hovering just below the $12,000 level, while Ethereum oscillated in the $430 zone. The spot activity by the majors may have been subdued but the derivatives market was alive and well, with Bitcoin Open Interest (OI) near record highs, while Ethereum’s OI recently crossed the $1.5bln mark. Alongside this, it is worth noting the rising 1-month volatility for Ethereum which, at the time of writing was at 102%, while the 3-month was also at 102% and the longer dated 6-month at 94%. At the same time, Bitcoin’s equivalent was at 72%, 80% and 79%. Clearly then, absorbing the above data in conjunction with the skew profile, indicates that the market is putting a lot of hope on Ethereum “succeeding” in its efforts to transition from the current Proof of Work (PoW) to Proof of Stake (PoS). Only time will tell whether the bulls had it right, but in the meantime the market will have to contend with out of control gas and transaction costs, as the number of daily transactions continues to be supported by the booming DeFi market. On that note, all was going well for the latest Ethereum testnet up until it crashed last Friday and was unable to reach finality with it stuck currently. A time related bug brought down Prysm which quite astonishingly is being used by the vast majority of validators despite there being five clients. As per trustnodes, apparently “the nodes connect to a NTP server to sync their time and they returned wrong values. Currently they use 6 NTP servers to mitigate this, but it seems this was not enough as they all returned wrong timings.” According to the diagnosis report: “The cloudflare roughtime servers all returned wrong information, and Prysm nodes did not properly fallback from this situation.” Of note, the testnet had about 30,000 validators on it and about one million eth. The aforementioned issue, together with the ongoing rise in transaction fees, prompted an aggressive rally by OMG Network (OMG), which is up over 70% month-to-date alone. As a reminder, OMG Network can take USDT transactions off chain. The idea is to enable USDT deposits and withdrawals on the OMG Network, which will reduce confirmation times, make payments faster, and lower transaction costs at the same level of security as Ethereum. Elsewhere, a small cap Orchid (OXT) has rallied over 250% over the last seven days, the move spurred on by the reports that Orchid has added support for WireGuard, a fast-growing VPN protocol, for all users across iOS, macOS, and Android. People can now configure multiple hops through WireGuard, OpenVPN and/or the Orchid network to protect their Internet traffic and stay private online. Yet even after such an aggressive spike higher, there was little downside pressure noted in OXT, instead any selling was immediately absorbed. Finally, as per Decrypt, a record high of $6 billion worth of crypto is now locked in decentralized finance (DeFi) smart contracts, according to data analytics site DeFi Pulse.The new milestone edges Friday’s high of $5 billion, and comes as dozens of Ethereum-based financial products are drawing millions of dollars of investment amid market surges — and collapses. DeFi mainstays Maker, Curve, Aave and Curve Finance lead the pack, with some $4.2 billion locked in between them. It is also worth noting that the total market cap of DeFi, or decentralized finance, is now $15 billion, according to metrics site Coin Gecko. The growth is staggering. On August 9, DeFi's market cap hit $11 billion. By August 12, $13 billion. And now four days later — the rise almost like clockwork in DeFi's — the market cap hits $15 billion. At the time of writing, DeFi's market cap was $15.1 billion. High yield and the prospect of earning excess rewards in (very) short window, continue to appeal to crypto risk seekers but to take cue from Wall Street, just because there is yield it doesn’t mean you need to buy it (DYOR - do your own research).
