February 10

This week, Aave launches its GHO stablecoin on testnet, the SEC cracks down on staking services, Metamask looks to go multi-chain and Salt Lending is revived with $64M in funding.

February 10, 2023

To the DeFi community,

This week, the CeFi world is under fire as the SEC cracks down on staking services, with Kraken having to settle with the agency for a $30 million fine, as well as shutting down its staking program.

The move comes very shortly after Coinbase CEO Brian Armstrong warned that the SEC was going to take action on such services – which he says will hurt both Coinbase and the Ethereum network itself.

Coinbase offers a staking service that lets investors stake smaller amounts of Ethereum, with no minimum amount required, and earns a fee of 25% of the Ethereum yields. 

Kraken co-founder and CEO Jesse Powell has reiterated that the settlement affects only US customers, while global customers are free to continue staking as usual.

 

DeFi giant Aave has deployed its native stablecoin, GHO, on the Ethereum Goerli testnet network with the stablecoin's codebase available on GitHub. 

GHO will be pegged to the US dollar and will be overcollateralized, meaning users must supply collateral in amounts exceeding the value of GHO they wish to mint. The Aave DAO will earn interest payments from borrowers of GHO and control the facilitator set for the stablecoin.

The rollout of GHO on Ethereum mainnet is still yet to be approved by the Aave DAO at a later date.

MetaMask Snaps is a new addition to the MetaMask ecosystem, aiming to facilitate a "multichain future" by allowing the Ethereum-based wallet to support non-native blockchains and tokens. 

MetaMask has already created a Bitcoin Snap, making it possible to incorporate all blockchain protocols. Snaps is currently available in the developer version of MetaMask Flask and is expected to be integrated with the main MetaMask by the end of 2023.

 

Salt Lending, one of the world's first cryptocurrency lenders, has closed a $64.4 million financing round to strengthen its balance sheet and replenish its capital reserves. 

Accredited investors will receive preferred stock in return for their funding, which is subject to approval by regulatory authorities. The company hopes to return to full operation in the first quarter. 

Salt Lending announced a freeze on withdrawals and deposits in November last year, due to the FTX crash. The company also lost its California lending license, but it is working with regulators to restore it.

US agencies are coming at centralized crypto platforms at a seemingly unprecedented rate, as the SEC goes after exchanges offering staking as a service – beginning with Kraken, with others soon to come.

Paxos, the stablecoin issuer behind Binance’s BUSD, has also come under investigation by the NYDFS, while several other exchanges have been investigated in recent weeks or months.

The moves from these authorities – targeting seemingly simple functions such as staking services, rather than more serious criminal activity – may truly drive activity further towards decentralized platforms, as customers look for alternatives to centralized providers. Unfortunately, the crackdown may also hamper new crypto adoption on a broader scale, at least in the United States.

Stablecoins may also be on track to get some competition in the form of central bank digital currencies, as the Bank of England becomes the latest to announce their digital currency project. Right on cue, we have Aave finally taking action to deploy their decentralized rival, the GHO stablecoin, on Ethereum’s Goerli testnet – with a mainnet launch possibly around the corner.

Another trend to keep an eye on is major projects going multi-chain: MetaMask, Uniswap, Trader Joe all being recent platforms expanding to multiple networks.

Interest Rates

Highest Yields: Nexo Lend at 10% APY, Aave at 1.3% APY

MakerDAO Updates

DAI Savings Rate: 1.00%

Base Fee: 0.00%

ETH Stability Fee: 0.50%

USDC Stability Fee: 0.00%

WBTC Stability Fee: 0.75%

Highest Yields: Nexo Lend at 10% APY, Coinbase at 1.5% APY

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Stat Box

Total Value Locked: $47.62B (down 2.8% since last week)

DeFi Market Cap: $47.30B (down 3.1%)

DEX Weekly Volume: $11.82B (up 22%)

DAI Supply: 5091B (down 0.4%)

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