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This Week In DeFi – November 4

This week, Meta officially integrates Polygon, Solana and Arweave for NFTs, Alameda Research worries some with its financials, and GALA has a $2B hack-scare.

November 04, 2022

To the DeFi community,

This week, Meta has officially integrated the Polygon and Solana blockchains, as well as decentralized data storage platform Arweave into its Instagram NFT features. 

Users will soon be able to create digital collectibles on the social media platform, as well as purchase and sell them – all directly within instagram. The feature will begin with a small group of US testers, with expansion to other countries also on the way.

Arweave’s token surged 60% on the news, while Polygon also outperformed much of the market.

Crypto trading firm Alameda Research has revealed details of its balance sheet, showing extremely close ties to crypto exchange FTX and somewhat illiquid assets.

Most notably, a significant proportion of Alameda’s holdings are made up of billions of dollars worth of FTT, FTX’s exchange token – much of which is locked up as collateral. Another $900 million or so is made up of locked or collateralized Solana tokens, as well as other tokens such as SRM, MAPS, OXY and FIDA.

The details have drawn concern about the $7.4 billion in loans Alameda has taken out against very low-liquidity assets, as well as its incestuous relationship with FTX.

Web3 gaming platform Gala Games caused some panic among the community yesterday as $2 billion worth of GALA tokens were minted out of thin air. 

The project later claimed that it “attacked” itself in an effort to prevent bad actors from making away with funds from a potential exploit. The problem arose from a “misconfiguration” of a bridge from the multi-chain protocol, pNetwork.

Only GALA tokens on BNB Chain were affected.

 Huobi’s HUSD stablecoin has plummeted to just a third of its target value, not long after its delisting from the Huobi exchange. The exchange announced that it would convert users’ assets to Tether (USDT), in a 1:1 ratio. 

Alameda Research is giving the DeFi community traumatic flashbacks to 3 Arrows Capital insolvency, as worrying details arise around the nature of the company’s finances. Of particular worry is the apparent illiquidity of a majority of the firm’s holdings, against which it has borrowed several billion dollars’ worth of assets.

The nature of Alameda’s holdings has also raised questions about the ethics and possibly the legality of its business dealings, given its proximity to major exchange FTX. Most of Alameda’s holdings are directly related to FTX-affiliated assets, pointing to some questionable dealings.

At the center of it all once again is Sam Bankman-Fried, who came under fire recently for his proposed regulations on the DeFi sector.

Moving on from Bankman-Fried’s behavior, we have mixed treatment of DeFi and crypto by financial institutions this week; Santander is restricting how much of their own money UK customers are “allowed” to spend on crypto, while Fidelity opens the floodgates to retail crypto investment with commission-free trading.

JP Morgan and its peers have also run some interesting tests on a modified version on Aave on Polygon – showing some potential use-cases for the meshing of traditional finance and DeFi

Interest Rates

Highest Yields: Nexo Lend at 10% APY, BlockFi at 6% APY

MakerDAO Updates

DAI Savings Rate: 0.01%

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, BlockFi at 7.50% APY

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Stat Box

Total Value Locked: $54.89B (up 1.5% since last week)

DeFi Market Cap: $48.00B (up 4.9%)

DEX Weekly Volume: $11B (up 10%)

DAI Supply: 5.67B (down 1.7%)

Bonus Reads

[Aleksandar Gilbert – The Defiant] – DeFi 2.0 makes a comeback with “Chicken Bonds”