Circle preps $1B war chest to deal with market threats from PayPal and others

August 10, 2023 Coin Telegraph

Circle

Circle’s USDC stablecoin has dropped from $45 billion in circulation at the start of 2023 to just $26 billion as the summer winds down.

Stablecoin issuer Circle has a $1 billion cash reserve pegged as insurance against a declining market capitalization and fresh competition from the traditional finance and technology industries, said CEO Jeremy Allaire.

In an interview with Bloomberg, Allaire revealed the war chest and shared his views on the uptick in competition from organizations such as PayPal that are new to the stablecoin space:

“I expect you will see many many, not just internet payments firms, but also all kinds of financial services companies and others begin to get more involved in this. It’s great to have this new competition. I do think it’s going to drive more and more companies into the field.”

Circle is best known for its USDC (USDC) stablecoin, a digital token similar in design to regular cryptocurrency but backed entirely by fiat — in this case, the United States dollar.

However, since at least 2021, the company’s primary form of revenue has come from interest on its cash holdings and through its treasuries services. For the first half of 2023, Circle had a reported revenue of $779 million, surpassing its total revenue of $772 for 2022.

Despite this, the company has seen its market share in the stablecoin space decline from $45 billion at the start of 2023 to $26 million in just seven months.

Allaire attributes this decline to cryptocurrency exchange Binance’s decision to pull backing from USDC in favor of its own token and other unfortunate events in the market. “The Terra collapse helped us; the Binance forced-conversion hurt us,” the Circle CEO told Bloomberg, adding that “the FTX collapse sort of helped us, and then the failure of regional banks hurt us.”

In related news, as Cointelegraph recently reported, Circle launched a wallet-as-a-service API for developers as part of its current ongoing Web3 initiatives. According to an Aug. 8 announcement, the new API will allow devs to create bespoke multiparty computation wallets for their customers.

Tether CTO Says PayPal’s PYUSD Could Erode USDT’s Competition in America: Report

August 9, 2023 The Daily Hodl

Binance drops majority of USD Coin reserves — Latest USDC news

August 9, 2023 Coin Telegraph

Binance

This week’s episode of The Market Report explores the reasons why Binance let go of a majority of its USDC reserves and what it replaced them with.

In the most recent episode of The Market Report, analyst and writer Marcel Pechman delves into the topic of crypto exchange Binance’s proof-of-reserves. This report reveals a significant decline in USD Coin (USDC) balances, plummeting from $3.4 billion on March 1 to a mere $23.9 million by May 1.

According to insights from on-chain analyst Aleksandar Djakovic, this decline signifies that Binance utilized the $3.4 billion to procure 100,000 Bitcoin (BTC) and 550,000 Ether (ETH) during that period, totaling approximately $3.5 billion. The central question, as posed by Pechman, revolves around whether this investment was initiated by Binance users, thereby distancing Binance CEO Changpeng Zhao and the company from direct involvement.

Pechman disagrees with this conjecture, although he does acknowledge the possibility of the exchange accessing a portion of its USDC reserved for margin or derivatives trades. Nevertheless, he finds the notion of depleting the entire balance without client awareness or impacting the exchange’s day-to-day functions implausible.

Transitioning to the next segment of the show, Pechman delves into PayPal’s imminent launch of a stablecoin, announced on Aug. 7. This stablecoin, issued by Paxos Trust and built on the Ethereum blockchain, bears striking similarities to USDC and Paxos USD (USDP). Yet, Pechman highlights a distinguishing factor in the integration of the stablecoin with PayPal and Venmo.

Ultimately, Pechman concludes that there is no discernible benefit for end users in adopting this new stablecoin. Other stablecoins, he points out, offer both yield and a more extensive presence in the decentralized applications market.

Lastly, Pechman addresses the circulating rumors that Huobi executives within the cryptocurrency realm are facing arrest by Chinese law enforcement. He also raises questions about Tron founder Justin Sun and the peculiar drawdown of Tether (USDT) reserves from Huobi.

For further insights into these matters, tune in to the latest episode of The Market Report, an exclusive show available on the newly launched Cointelegraph Markets & Research YouTube channel.

USDC issuer Circle launches MPC wallet beta for Ethereum, Polygon, Avalanche

August 8, 2023 Coin Telegraph

Circle

The stablecoin issuer launched a service and API that allows developers to create customized wallets for their users.

USD Coin (USDC) issuer Circle has released a beta version of a multi-party computation wallet (MPC) service, according to an Aug. 8 announcement. The new service will allow developers of DeFi apps, Web3 video games, e-commerce services, and other blockchain applications to create customized wallets specifically for their users. It will be available initially on Ethereum, Avalanche, and Polygon.

Building crypto apps is still too hard. Plus, less than 0.5% of the 100 million developers worldwide are actively building crypto apps today.

This needs to change. Our new wallet-as-a-service developer platform is a huge step in that regard. Check it out https://t.co/ku9LTz8Z97
— Patrick Hansen (@paddi_hansen) August 8, 2023

MPC wallets are secured by splitting the user's private key into multiple shards and distributing them through a decentralized network. It’s a new wallet technology many Web3 developers have been using. MPC wallets can be accessed via an application programming interface (API), giving them a “Web2 feel” that some developers and users prefer.

According to an explanatory blog post from Circle, the new service will allow developers to “choose the best wallet security and control configurations.” For example, some developers may want to host their own MPC nodes to ensure they are not completely reliant on Circle, while others may want to choose the simpler method of connecting to Circle’s nodes. Developers can also choose to “share transaction signing responsibilities with the users,” allowing them to recover keys if users lose them, or they can make the product noncustodial by requiring users to sign every transaction.

According to Circle co-founder and CEO Jeremy Allaire, the new service is essential in promoting the use of USDC:

“Circle’s Programmable Wallets is part of a new, core pillar of our strategy to advance global, mainstream utility and adoption of digital assets like USDC and public blockchain-based payments[.] This new platform marks the first step for Circle’s Web3 services as we work to ease common pain points for developers[.]"

MPC wallets have faced controversy recently, as the widely used Multichain MPC bridge was hacked on July 7, causing investors to lose over $100 million. The Multichain team later admitted that all MPC shards had been stored on a cloud server under the control of their CEO.

In an emailed statement to Cointelegraph, Circle's senior director of product management Gagan Mac claimed that the new service “is built and maintained in-house, and doesn’t leverage external vendors,” implying that third-party cloud storage systems will not be used. In addition, Gagan stated that “some developers and enterprises may prefer to host an MPC node,” which they will be allowed to do if they wish. Multichain did not allow partners to host their own nodes.

Circle recently stated that the demand for Euro-based stablecoins is heating up and also argued that a Yuan stablecoin will be better than a Chinese CBDC.

Tether Excess Reserves Shatter $3,000,000,000 As Stablecoin Issuer Uses Profits To Back USDT

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Tether (USDT) Hits New All-Time High in Market Cap After Printing $1,500,000,000 in Net Profit: IntoTheBlock

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Coinbase Launches Feature Allowing for Direct Messaging Between Ethereum Addresses

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Stablecoin Issuers Circle and Tether Freeze Stablecoins Tied to Multichain Exploit: On-Chain Data

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Advocates call for Hong Kong govt stablecoin to compete with Tether and USD Coin

July 4, 2023 Coin Telegraph

Business

Crypto and blockchain advocates have authored a report calling for the Hong Kong government to issue a stablecoin pegged to the region’s dollar, which could challenge the dominance of Tether and USD Coin.

According to an English translation of a July 3 report provided by Chinese crypto reporter Colin Wu, four individuals tied to financial innovation proposed the government issue an HKDG (Hong Kong Dollar Government) stablecoin to support its leadership efforts in the digital economy. Wang Yang, vice president for institutional advancement at Hong Kong University of Science and Technology; Cai Wensheng, founder of smartphone software firm Meitu; Lei Zhibin, an honorary chair of the Hong Kong Blockchain Association; and doctoral student Wen Yizhou co-authored the paper.

“Issuing a stablecoin pegged to the Hong Kong dollar not only helps to solidify Hong Kong’s leadership in the blockchain sector but also propels the progress of the digital Hong Kong dollar, enhancing transaction efficiency, reducing transaction costs, improving current payment systems, and further strengthening Hong Kong’s fintech capabilities,” said the report. “Moreover, the Hong Kong Dollar stablecoin can enhance the efficiency and inclusiveness of Hong Kong’s financial system; its stability, freedom of exchange, high security, openness, and cross-border liquidity can support a wider range of financial innovations.”

A Proposal for Hong Kong to Issue a Hong Kong Dollar Stablecoin to Compete with USDT/USDC

By Vice President of Hong Kong University of Science and Technology and Chairman of Meitu

Read more: https://t.co/pCTxkqMLM7
— Wu Blockchain (@WuBlockchain) July 4, 2023

Yang, Wensheng, Zhibin, and Yizhou argued that the government’s plan of encouraging private institutions to issue stablecoins pegged to the Hong Kong dollar was “too conservative” in contrast to its intention of promoting crypto and blockchain. The report claimed that Hong Kong’s foreign exchange reserves as of March 2023 totaled roughly $430 billion, “significantly surpassing” the combined market capitalization of Tether (USDT) and USD Coin (USDC) at roughly $120 billion.

”HKDG backed by the SAR [special administrative region] government will have higher credibility and lower risk, [...] especially as the credibility of USDT remains in question, and USDC has recently experienced severe discounts.”

Among the benefits the report’s authors believed could come from the launch of HKDG included challenging the dominance of the United States dollar, providing additional liquidity for government projects and making it easier for officials to monitor and assess risks. However, the report cited potential risks, including legal and regulatory challenges, international disputes over transactions potentially tied to illicit funding and hacks.

“The risks borne by the government-issued HKDG are significantly lower than those of the Hong Kong Dollar stablecoin issued by private institutions,” said the report.

In June, the government of Hong Kong announced it had formed a task force to oversee the development of Web3. More than 80 firms involved in digital assets or blockchain reportedly considered establishing a presence in the SAR as of March, in addition to the roughly 800 fintech companies already in Hong Kong.

Magazine: HK crypto ETFs on fire, Binance warns on Maverick FOMO, Poly hack: Asia Express

Curve pool imbalance triggers USDT depeg concerns: Finance Redefined

June 16, 2023 Coin Telegraph

Coin Telegraph

The top 100 DeFi tokens had another bearish week, with the majority of tokens trading in the red.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.

On June 15, an imbalance in Curve Finance’s 3pool led to a Tether (USDT) depeg scare as the stablecoin’s weightage in the pool rose above 70%, leading to heavy selling. Tether’s chief technology officer claimed these market conditions are stress tests for the stablecoin and played down the depeg “FUD.”

In other news, a crypto trading bot programmed to execute arbitrage trades borrowed $200 million to make just over $3 in profit.

Uniswap, the decentralized exchange protocol, released its version 4 code on June 13, making way for new liquidity pools.

DeFi lending platform Sturdy Finance was drained for $800,000. The protocol’s team offered a $100,000 bounty for returning the funds and reopened its stablecoin market on June 16. In another exploit, the Hashflow protocol was drained for $600,000; however, Hashflow assured users they would be “made whole.”

The top 100 DeFi tokens had another bearish week, with most of the crypto tokens trading at three-month lows.

Curve pool imbalance triggers USDT depeg concerns, Tether CTO calls it FUD

USDT slightly deviated from its United States dollar peg on June 15 due to an imbalance in Curve’s 3pool. The price of USDT fell by 0.3% to around 0.997 as its weightage in the curve 3pool increased to over 70% from the usual 33.1%.

Curve’s 3pool is a stablecoin pool for decentralized finance holding a massive amount of liquidity in the three top stablecoins: USDT, USD Coin (USDC) and Dai (DAI). A significant rise in the weightage of a particular stablecoin in the pool indicates heavy selling of that asset.

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Crypto trading bot borrows $200 million for a $3 gain

A crypto trading bot programmed to perform arbitrage trades made various complex moves within the Ethereum blockchain — including taking a $200 million flash loan — to secure a mere $3.24 profit.

On June 14, blockchain analysis firm Arkham Intelligence shared a breakdown of the bot’s movements. According to the firm, the transaction was made by an arbitrage bot that uses flash loans.

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Uniswap releases version 4 code, allowing for new types of liquidity pools

Uniswap Labs has released a draft of the code for Uniswap v4, announcing the move in a June 13 blog post from Uniswap’s founder, Hayden Adams. The new code features “hooks,” or plugins that allow developers to create custom liquidity pools.

Uniswap is the largest decentralized crypto exchange by volume. Its latest version, v3, was deployed on May 4, 2021.

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Attacker drains $800,000 from DeFi protocol Sturdy Finance

DeFi protocol Sturdy Finance has lost 442 Ether (ETH), worth almost $800,000 when writing, to a security exploit. The attacker exploited a vulnerability that eventually manipulated a faulty price oracle, allowing them to drain funds from the protocol.

On June 12, blockchain security firm PeckShield alerted Sturdy Finance and reported a transaction that seemed to be related to price manipulation. Almost an hour later, the DeFi protocol said it was aware of the exploit and responded by pausing all markets and assuring its users that no additional funds were at risk.

Sturdy Finance reopened its stablecoin market on June 16, nearly three days after the exploit. The DeFi protocol also offered a $100,000 bounty to anyone who could help bring an arrest or recover the funds

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Hashflow assures users will be made whole following $600,000 exploit

Crypto trading platform Hashflow has assured affected users will be “made whole” following an exploit that saw at least $600,000 in digital assets removed from the platform. On June 14, blockchain security firm PeckShield reported an ongoing issue with the Hashflow trading platform.

A couple of hours later, Hashflow alerted users that it was addressing the current situation related to contract approvals as flagged by PeckShield.

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DeFi market overview

DeFi’s total market value saw a bearish decline this past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a bearish week, with most tokens trading in the red. The total value locked in DeFi protocols remained below the $50 billion mark.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.

USD Coin

Curve pool imbalance triggers USDT depeg concerns, Tether CTO calls it FUD

Crypto trading bot borrows $200 million for a $3 gain

Uniswap releases version 4 code, allowing for new types of liquidity pools

Hashflow assures users will be made whole following $600,000 exploit

DeFi market overview

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