Circle CEO Jeremy Allaire says that non-US markets are driving the adoption of Circle’s dollar-pegged stablecoin USD Coin (USDC). Allaire says there’s a large international demand for “safe, transparent digital dollars.” “Despite the hype that we’re all about the US, we estimate that 70% of USDC adoption is non-US, and some of the fastest growing […]
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Launched in April, the USDC Pools were previously accessible only to non-U.S. accredited investors.
Blockchain institutional capital marketplace Maple Finance has secured an exemption from the United States Securities and Exchange Commission (SEC) to offer its one-month U.S. Treasury yields to accredited investors in the U.S.
Before the Aug. 9 announcement, the Maple Finance Treasury Pools were only available to accredited investors outside the U.S. Through the SEC Regulation D Rule 506(c) Exemption, a firm may offer investment products, without prior registration, to individual investors in the U.S. with a net worth exceeding $1 million excluding the value of their primary residence, or with an annual income exceeding $200,000 per year ($300,000 if their spouse is included). A firm may also sell such investment products to accredited U.S. entities, such as banks.
Data from Maple Finance show that over 21 million USD Coin (USDC) have been deposited into its Treasury Pool, which currently holds an annualized yield of 4.76%. No inbound or outbound fees are charged, except for an annualized management fee of 0.50% taken from the yield.
Developers wrote that "onboarding takes 15 minutes and Lenders can download monthly interest statements anytime." The website states that withdrawals are processed within a maximum of 48 hours. Room40 Capital, an institutional crypto hedge fund founded in 2022, is currently the sole borrower from the pool.
Room40 Capital said the "proceeds will be used to purchase and hold short-dated U.S. Treasury bills and reverse repurchase agreements fully collateralized by U.S. Treasury bills only." The firm has made 46 payments thus far since the Treasury Pools launched in April, with no late payments.
Magazine: DeFi faces stress test, DoJ fears run on Binance, Hong Kong’s crypto trading
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.
— Patrick Hansen (@paddi_hansen) August 8, 2023
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
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.
Major stablecoin issuers Tether and Circle are focusing on non-U.S. markets where adoption is growing.
Circle CEO Jeremy Allaire estimates as much as 70% of USD Coin (USDC) adoption comes from countries outside of the United States.
On Aug. 8 tweet to his 131,300 followers on X (Twitter), Allaire said the high rate of non-U.S. adoption was “despite the hype that we're all about the US,” adding:
“We estimate that 70% of USDC adoption is non-US, and some of the fastest growing areas are emerging and developing markets.”
He added that strong progress was happening across Asia, Latin America (LATAM), and Africa.
Despite the hype that we're all about the US, we estimate that 70% of USDC adoption is non-US, and some of the fastest growing areas are emerging and developing markets. Strong progress happening across Asia, LATAM and Africa. Demand for safe, transparent digital dollars is…
— Jeremy Allaire (@jerallaire) August 7, 2023
Paolo Ardoino, CTO of rival stablecoin issuer Tether, echoed a similar non-U.S. focus for his firm and stablecoin. In February, he said that USDT can be “considered a safe tool for emerging markets and developing countries.”
Cointelegraph reached out to Circle for further details on non-U.S. expansion but had not received a response at the time of publication.
Allaire's comments came amid an announcement from PayPal tha it is launching its own USD-pegged stablecoin, PayPal USD (PYUSD), where he congratulated the firm and Paxos, adding:
"It's incredibly exciting to see such a significant internet and payments company entering the stablecoin space. This is what happens when we start to get regulatory clarity."
His comments also come amid a decline in USDC supply since the beginning of 2023, due to dwindling demand and an increase in redemptions. As a result, its stablecoin market share has shrunk to just 21% with a total circulation of $26.1 billion.
Related: Circle to launch ‘official version’ of USDC natively on Arbitrum
On Aug. 8, Allaire also commented on concerns over USDC liquidity, confirming that redemptions were outpacing issuance stating, “Over the past month, we've issued $5B USDC, and have redeemed $6.6B USDC.”
Allaire added that Circle’s global banking and liquidity network was expanding and the firm was working with “exceptional and high-quality banks in major regions around the world.”
USDC Liquidity. Over the past month, we've issued $5B USDC, and have redeemed $6.6B USDC.
— Jeremy Allaire (@jerallaire) August 7, 2023
USDC banking is public and transparent, with 24/7/365 mint/burn, and wire settlement with nearly 90 countries.
USDC reserves are attested by Deloitte every month, and all of our T-bill…
In a transparency report released on Aug. 3, the firm stated that its Circle Reserve Fund held a 93% portfolio of short-dated US Treasuries, overnight US Treasury repurchase agreements, and cash. The remaining 7% is cash reserves at banks, according to Circle.
In early June, Circle announced that it had received a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS).
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The Coinbase earnings report shows that services and subscriptions are the exchanges’ core revenue streams. Is this a positive or a negative?
Coinbase, a leading U.S. cryptocurrency exchange, shared its 2Q results on August 3. Despite showing a net loss, some positives emerged, like a 13% cut in operating expenses from the last quarter and a 3% boost in its cash reserves to $5.5 billion.
However, the exchange took a hit with a $97 million net loss, worse than its previous quarter, and saw a 32% drop in its adjusted EBITDA to $194 million in 2Q.
One downside was the 7% fall in subscription and service revenue from 1Q. The letter to shareholders revealed that a 28% decrease in the USDC stablecoin market cap partly caused this. Since Coinbase holds a stake in Circle, the USDC's issuer, they gain from the interest rate offered by the stablecoin reserves.
Additionally, customer fiat balances deposited at the exchange serve as another revenue source. But despite these, Coinbase's interest income fell by 16% from the last quarter to $201 million in 2Q.
Even so, the numbers suggest that Coinbase has successfully lessened its dependence on trading fees. Subscription and service revenues matched trading revenues in the first half of 2023, a shift more noticeable when you consider transaction costs consume about 15% of its revenues. This suggests that Coinbase has transitioned from a trading firm to a service broker, prioritizing recurring revenues.
Looking at Coinbase's (COIN) share price, there isn't a clear sign of this shift in focus throughout 2023. This suggests that either investors still firmly believe that trading fees will remain the key income driver for the company, or they simply haven't been crunching the numbers as diligently as they should.
It's impossible to accurately predict what direction the cryptocurrency market will take in the next few years, but one can certainly assess Coinbase's potential to ramp up its services and subscription revenues, independent of how trading fees pan out. There are several notable events on the horizon that could significantly cut the exchange’s reliance on trading.
The first is that Tether, the largest stablecoin by market cap, is eventually sued by DOJ and loses its banking partnerships. If the company issuing Tether were to be sued by the Department of Justice (DOJ) and consequently lose its banking partnerships, it could suffer a considerable loss in market cap. This scenario could create a massive opportunity for USDC to swoop in and fill the void. Because Coinbase enjoys revenue from Circle, the issuer of USDC, such a shakeup could potentially multiply Coinbase's service revenue by up to four times.
Second, Binance could be effectively shut down by regulators. Despite its stance as the reigning champion of cryptocurrency exchanges in terms of trading volume, Binance has been attracting attention from regulators worldwide, and not the good kind. If regulatory pressures were to effectively shut down Binance, this could pave the way for Coinbase to seize a substantial increase in market share. The knock-on effect would likely be a significant boost in service revenues for Coinbase.
Third, is the potential launch of Bitcoin spot ETFs in the United States because this could be a game-changer for Coinbase. The company has already entered into surveillance-sharing agreements with ETF issuers, and it's ready to provide custody services. This new avenue would create an additional source of revenue for Coinbase.
Lastly, it's important to remember that while Coinbase's current focus is on cryptocurrency trading and custody services, the company has plans to diversify and expand its product offerings. For instance, it's planning to launch a margin trading platform and a cryptocurrency lending platform. These new products and services have the potential to generate significant revenue from services and subscriptions.
The crypto landscape's volatility clouds judgment on whether Coinbase's pivot to non-trading revenues is the right call. But signs are showing that Coinbase is agile and adaptive, slashing expenses and fortifying its cash chest. They've managed to match subscription revenues with trading revenues, a clear indicator of this adaptability.
Related: Coinbase to file order seeking dismissal of SEC lawsuit
The billion-dollar question, however, is whether the investors will acknowledge and reward this shift in revenue generation. Currently, it seems that investors aren't paying adequate attention to Coinbase's strategic revamp but if some of the scenarios mentioned before come to life, they could be in for a pleasant surprise. It's a dynamic space, and this crypto giant seems to be playing its cards strategically.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
The issuer of the Tether (USDT) stablecoin says its excess reserves have increased by hundreds of millions of dollars in the second quarter of 2023. Tether Holdings says that its total excess reserves increased by approximately 35% to $3.3 billion in the second quarter. “In a continuation of Tether’s public commitment towards openness, it also […]
The post Tether Excess Reserves Shatter $3,000,000,000 As Stablecoin Issuer Uses Profits To Back USDT appeared first on The Daily Hodl.
Tether (USDT) is seeing its market capitalization rise to new all-time highs as the company behind the top stablecoin generated billions of dollars in profits earlier this year. Analytics firm IntoTheBlock says that USDT’s market cap is rapidly approaching the $84 billion level after starting the year at just $66 billion. IntoTheBlock adds that Tether’s […]
The post Tether (USDT) Hits New All-Time High in Market Cap After Printing $1,500,000,000 in Net Profit: IntoTheBlock appeared first on The Daily Hodl.
The lending app was drained of funds using a “read-only reentrancy” bug, a type of vulnerability that is often difficult for auditors to spot.
Lending app Era Lend on zkSync has been exploited for $3.4 million worth of crypto, according to a July 25 report from blockchain security firm CertiK. The attacker used a “read-only reentrancy attack” to drain the funds, which is a type of attack that interrupts a multi-step process and then causes it to continue after a malicious action has been performed. Specifically, a “read-only” reentrancy is one that does not update the state of a contract.
#CertiKSkynetAlert
— CertiK Alert (@CertiKAlert) July 25, 2023
We are seeing reports that @Era_Lend has been exploited on zkSync
Total losses appear to be $3.4 million in a read only reentrancy attack
See more below https://t.co/h8xrjccE5i
According to the report, the attacker drained funds in two separate transactions, using the externally owned account 0xf1D076c9Be4533086f967e14EE6aFf204D5ECE7a. They relied on a vulnerability in the “the callback and _updateReserves function” to manipulate a contract into reporting old values that had not yet been updated.
Era Lend is a fork of the Syncswap project, and CertiK claimed that other projects based on Syncswap may also be vulnerable to the exploit.
On-chain sleuth and Twitter user Spreek reported that the Syncswap code allows a user to “burn, then callback before update_reserves is called,” causing the oracle to report incorrect values.
in the syncswap LP tokens, one can burn, then callback before update_reserves is called. so the oracle uses an incorrect reserves value to calculate the price, resulting in an inflating oracle price. pic.twitter.com/0U7Vu7BzJM
— Spreek (@spreekaway) July 25, 2023
Spreek also reported that the Era Lend team had acknowledged the attack and paused the protocol’s zkSync contracts to prevent further exploits.
Another blockchain investigator, known on Twitter as Saul, reported that the attack had affected stablecoin USDC+, which is issued by the Overnight Finance protocol. According to Saul, the Overnight team has acknowledged the exposure and has paused its own contracts as well. Over $261,000, or 7.86% of the total worth of the collateral backing the stablecoin, may have been lost.
In a June 7 blog post explaining how read-only reentrancy attacks are carried out, pseudonymous blockchain investigator Officer’s Notes stated that these vulnerabilities are difficult for auditors to spot, since “Typically, auditors and bug hunters are only concerned with entry points that modify state when looking for reentrancy.”
To help alleviate this problem, Officer’s Notes recommends that auditors use specialized software to aid them in finding these vulnerabilities.
Era Lend runs on the zkSync network, a zero-knowledge proof Ethereum layer-2 rollup. In April, the network’s total value locked reached over $110 million. The network’s developers intend to create an ecosystem of interoperable chains called “Hyperchains” by the end of the year.
Top US-based crypto exchange platform Coinbase is launching a new feature that would allow private direct messaging between Ethereum (ETH) addresses. In a new thread, Coinbase says that it is rolling out a new decentralized chat feature for its wallet powered by web3 chat protocol XMPT that aims to grant users ownership of their chats. […]
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