Crypto funding seen shifting from CeFi to DeFi after major collapses: CoinGecko

March 6, 2023 Coin Telegraph

"NFTfi,” on-chain derivative platforms, decentralized stablecoins and Ethereum L2s are four investment opportunities being looked at closely by one crypto investment firm.

Digital asset investment firms poured $2.7 billion into decentralized finance projects in 2022, up 190% from 2021, while investments into centralized finance projects went the other way — falling 73% to $4.3 billion over the same timeframe.

The staggering rise in DeFi funding was despite overall crypto funding figures falling from $31.92 billion in 2021 to $18.25 billion in 2022 as the market shifted from bull to bear.

According to a March 1 report from CoinGecko, citing data from DefiLlama, the figures “potentially points to DeFi as the new high growth area for the crypto industry.” The report says that the decrease in funding toward CeFi could point to the sector “reaching a degree of saturation.”

*Funding amount by sector in the cryptocurrency market between 2018-2022. Source:* *CoinGecko*

The near three-fold increase in DeFi investment is also a staggering 65-fold increase from 2020, at the start of the last bull run.

According to CoinGecko, the largest DeFi funding in 2022 came from Luna Foundation Guard’s (LFG) $1 billion sale of LUNA tokens in February 2022, which came about three months before the catastrophic collapse of Terra Luna Classic (LUNC) and TerraClassicUSD (USTC) in May.

Ethereum-native decentralized exchange (DEX) Uniswap and Ethereum staking protocol Lido Finance raised $164 million and $94 million, respectively.

Meanwhile, FTX and FTX US were the largest recipients of CeFi funding, having raised $800 million in January — accounting for 18.6% of CeFi funding in 2022 alone. The crypto exchanges, however, collapsed only 10 months later and filed for bankruptcy.

Other areas of investments included blockchain infrastructure and blockchain technology companies, which raised $2.8 billion and $2.7 billion, respectively, a trend that has remained strong over the last five years, said CoinGecko.

Henrik Andersson, the chief investment officer of Australia-based asset fund manager Apollo Crypto, says his firm is looking at four specific sectors within crypto as of late:

The first is “NFTfi,” which he said results from the combination of DeFi and NFTs. These are NFT projects that use DeFi to implement various trading strategies to earn passive income, or long or short-trade NFT projects, among other things.

I haven't bought any NFTFI token

Just waiting for @nftperp to launch a token.

Anything perp derivatives outperforms other categories

Wen launch pic.twitter.com/yaW6HNkIGN
— DeFI Saint (@TheDeFISaint) February 17, 2023

The second and third are on-chain derivative platforms and decentralized stablecoins, which Andersson believes have come about due to the collapse of FTX and recent regulatory action:

“In the light of the FTX debacle and regulatory movements, we have seen renewed interest for on-chain derivatives platforms, such as GMX, SNX and LYRA. All seeing record volume/TVL.Decentralised stablecoins such as LUSD/LQTY has also gained from the current regulatory environment.”

After @LiquityProtocol listed on Binance, combined with the recent crackdown by the SEC against Centralized Stablecoins has put some spotlight on this narrative.

Let's check it out of TOP 15 Decentralized Stablecoins pic.twitter.com/XWJvWpaT4l
— HC - Capital (@hc_capital) March 5, 2023

The fourth vertical Andersson cited was Ethereum-based layer-2 networks. “2023 is set to be the year for L2s, and in particular Ethereum L2s,” he said.

The chief investment officer explained that layer-2 tokens such as Optimism (OP) have performed well of late, particularly in light of the testnet launch of “Base,” which was created by Coinbase and is powered by Optimism.

GMX, SNX, LYRA, LQTY and OP are all investments of Apollo Crypto.

Last month, cryptocurrency analyst Miles Deutscher predicted in a Feb. 19 tweet to his 301,700 followers that zero-knowledge rollup tokens, liquid staking derivative tokens, artificial intelligence (AI) tokens, perpetual DEX tokens, “real yield” tokens, GambleFi tokens, decentralized stablecoins and Chinese coins would perform well in 2023 on the back of heavy funding:

To make the biggest gains in crypto, you need to position yourself in the strongest narratives.

Some of the trends outlined in this thread still have potential to generate 50x opportunities.

: 8 crypto narratives I'm eyeing right now.
— Miles Deutscher (@milesdeutscher) February 18, 2023

Venture capital funding in the crypto space has, however, fallen over the last three consecutive quarters, amid tough market conditions.

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Binance launches Binance Bridge 2.0 to integrate CeFi and DeFi

March 29, 2022 Coin Telegraph

Binance

The service would allow users to bridge assets from any blockchain to BNB Chain.

On March 29, centralized cryptocurrency exchange Binance announced the rollout of Binance Bridge 2.0. The feature enables users to bridge assets from any blockchain, including from tokens not listed on the Binance app, to the BNB Chain. Bridged tokens listed on Binance will be stored in the Funding or Spot Wallet, while unlisted bridged tokens will be transferred to the Funding Wallet only.

Users can bridge-in or bridge-out tokens between their native blockchains and BNB Chain via regular deposit and withdrawal functions. In the future, Binance also plans to create a better version of its mobile app to allow users to facilitate such conversion via a single click. Regarding the development, Mayur Kamat, head of product at Binance, said:

"With Binance Bridge 2.0, we can make decentralized finance accessible to a larger audience worldwide while still providing the seamless user experience that centralized finance offers. We are already seeing this via the tremendous adoption of the PancakeSwap Mini-app.

Binance has also implemented a brand new automated token circulation control system in Binance Bridge 2.0. The exchange will not maintain a surplus of pegged tokens, also known as wrapped assets, except for a buffer size in hot wallets. Instead, it will print additional tokens when users withdraw pegged tokens onto the BNB Smart Chain.

The company indicated that all other circulation will be backed by the native tokens deposited by the users from the original blockchains. When users want to switch from the pegged tokens back to the original tokens, they can deposit the pegged tokens into Binance and withdraw the original tokens. Simultaneously, the excessive tokens will be swept to the cold wallet and burnt automatically.

Australian Senator says DeFi is ‘not going away any time soon’

November 22, 2021 Coin Telegraph

Australia

The Liberal Party Senator commented that DeFi “presents huge opportunities” for Australia to cement its place as a “front-runner for innovation.”

Senator Jane Hume has stated that decentralized finance (DeFi) “presents huge opportunities” for Australia to cement its place as a “front-runner for innovation and economic progress.”

Senator Hume spoke at the Australian Financial Review Super & Wealth Summit in Sydney on Monday, Nov. 22. She is the Minister for Women's Economic Security of Australia, representing the Liberal Party and the state of Victoria. The conference was primarily about super and government retirement funds — both notoriously slow and steady investments. The comments on DeFi are more notable in this regard.

Senator Hume called for industry and government to acknowledge that DeFi is “not a fad,” and to “tread cautiously, but not fearfully” because the technology is “not going away any time soon.”

“If the last 20 or 30 years have taught us anything, it’s that all innovation begins as disruption and ends as a household name,” she said. She also referenced the fast-paced nature of the industry:

“Decentralized finance underpinned by blockchain technology will present incredible opportunities ‑ Australia mustn’t be left behind by fear of the unknown.”

Speaking on policy, she noted that Australia’s economic future will be defined by “innovation” and “uptake of technology” as the country continues to recover from the financial toll of the COVID-19 pandemic.

She also commended industry players for “embracing innovation and developments in this space,” particularly around blockchain technology, making specific reference to Commonwealth Bank.

On Nov. 3, the bank announced it will allow the 6.5 million users of its banking app to trade 10 crypto assets including Bitcoin, Ether, Bitcoin Cash, and Litecoin.

“This will make CBA the first Australian bank — and one of just a handful of banks worldwide — to offer customers this sort of access,” she said.

According to Finder’s Crypto Survey of 27,400 respondents, 17% of Australians invest in cryptocurrency. However, the country’s uptake of crypto has seen increasing pressure from lawmakers and regulatory bodies.

Last month, the senate committee of pro-crypto NSW senator Andrew Bragg published its “crypto report,” which made 12 recommendations intended to tackle key issues pertinent to the cryptocurrency sector.

Bragg said that the recommendations will enable Australia to compete with leading jurisdictions for the blockchain and crypto industries, including Singapore, the United States, and the United Kingdom.

PBoC governor says digital yuan to be more privacy-enhanced than payment apps

November 9, 2021 Coin Telegraph

CBDC

Making the e-CNY more privacy-orientated aside, the PBoC already has ambitions to bring the CBDC onto the world stage.

During a virtual video session at the Bank of Finland Institute for Emerging Economies' 30th Anniversary Conference, People's Bank of China governor Gang Yi discussed recent developments regarding the country's central bank digital currency, or CBDC, known as the digital yuan (e-CNY). Gang specifically addressed the issue of privacy surrounding the Digital Yuan in the following statement, as translated by Cointelegraph:

We are taking a high degree of focus on issues surrounding the security of personal information and the digital yuan and have made relevant regulatory and technological adjustments to meet this objective. We have adopted a principle of anonymity for small transactions regarding the digital yuan and will only step in to regulate under the law for large transactions. When it comes to collecting personal data, we seek only to collect what is necessary and the minimum of what is legally required, which is far less than electronic payment apps of today.

Gang spoke on the storage and utilization of personal information belonging to users of the technology adding:

At the same time, we seek to control the storage and use of personal information strictly. Unless the law demands it, the PBoC will not hand over such information [on e-CNY users] to any third-party or government agency. In recent years, China has passed multiple laws to facilitate the safety and protection of personal data from a regulatory standpoint.

In recent months, the number of people with e-CNY accounts has ballooned to over 140 million. At the same time, its transaction volume surpassed 62 billion yuan ($9.7 billion) in October. When discussing the next steps forward for the CBDC, Gang explained that while the e-CNY remains confined mainly to consumer spending in China's retail sector, there are plans for cross-border expansion:

The PBoC wishes to cooperate with central banks, international agencies, and cryptocurrency entities across the globe. We have already launched an mCBDC Bridge with the Bank for International Settlements, The Bank of Thailand, the Central Bank of the United Arab Emirates, and the Hong Kong Monetary Authority. We have also begun technical discussions with the European Central Bank regarding the design of CBDCs.

Centralized Finance

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