Crypto Long & Short: This Week’s Top Crypto Stories

Weekly insights, news and analysis for the professional investor

By Marc Hochstein, Executive Editor

August 15, 2021

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Due to personal illness (not breakthrough COVID, I have thankfully confirmed), there won’t be a column from me in this week’s newsletter, but we’re bringing you an extended lineup of news briefs to provide context and keep you up to speed on the latest happenings in the cryptocurrency and blockchain industry. My regular column will be back next week.

As always, if you like what you read, please forward Crypto Long & Short, and reply to this email with feedback and questions. You can also find me on Twitter. Have a great rest of your Sunday.

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CHAIN LINKS

One of the largest ever cryptocurrency hacks took place on Tuesday. The cross-chain infrastructure platform Poly Network lost $611 million of user funds because of mismanagement of private keys. TAKEAWAY: Tether was able to help mitigate the attack by blacklisting the hacker’s wallet from sending, receiving or redeeming stolen USDT. Centralized stablecoins may go against the ethos of decentralized finance (DeFi), but they can help create a safer ecosystem for investors.

The $1.2 trillion infrastructure bill passed through the U.S. Senate without including an amendment to the provision for the cryptocurrency tax reporting section. TAKEAWAY: While the Senate was unable to revise a tax provision for cryptocurrency stakeholders, almost every senator was able to agree that stifling crypto market innovation was dangerous. Hearings on the matter were seen as a net positive for future regulation of and awareness about cryptocurrencies.

Helium Network raised $111 million in a token sale led by venture capital firm Andreessen Horowitz (a16z). TAKEAWAY: VC firms are willing to take on further risk than equity investments by investing directly in utility and governance tokens. A16z led another token sale that raised $314 million earlier this year for Solana Labs, the development team behind the general purpose blockchain Solana.

Ethereum’s fee market upgrade, EIP 1559, has resulted in the burning of over $120 million worth of ether. TAKEAWAY: Ethereum’s inflation rate has been significantly reduced through transaction fee burns, and 37,000 ether has already been burned. As transaction fees continue to combat new emissions, investors may find that ether will become scarcer.

Click here for more about EIP 1559, explained.

And click here for more real-time metrics and data about the impacts of EIP 1559.

Coinbase crushed earnings estimates on Tuesday, beating revenue and volume predictions by over 18% and beating earnings-per-share estimates by 152%. TAKEAWAY: A strong and volatile second quarter in the crypto markets fueling trading activity on Coinbase is the main reason for the wildly successful earnings. In order to diversify its revenue streams and rely less on the ebbs and flows of the crypto markets, Coinbase shared plans to add services such as lending and custody.
The proportion of ether (ETH) held on centralized exchanges hit a three-year low on Tuesday. Out of the 117 million ETH in circulation, only 9.4% was held on centralized exchanges. TAKEAWAY: The main factor for the outflow is DeFi, Eddie Wang, senior researcher at OKLink, told CoinDesk. Deposits and liquidity pools of popular DeFi protocols are reportedly attracting ETH away from centralized exchanges.

“Axie Infinity” is topping the charts as the number one gaming, non-fungible token and virtual reality application on Ethereum. TAKEAWAY: The pet-training game has generated more than $300 million in revenue over the past 30 days. During the same period, Axie’s price-to-earnings (P/E) ratio has fallen from 331 to five, suggesting the value of the application and its governance token has room to climb.

Total crypto market capitalization has passed above $2 trillion for the first time since May 19. TAKEAWAY: Bullish market sentiment seems to have returned to the crypto market, with cryptocurrency prices rising over the past three weeks. Stablecoin growth continues to make up a larger share of total crypto market capitalization, now accounting for nearly 6%, up from 4.6% since May 19.

A message from Copper

Copper provides a gateway into the cryptoasset space for institutional investors by offering custody, prime brokerage, and settlements across 250 digital assets and more than 40 exchanges. We are committed to providing flexible solutions that adapt to the changing cryptoasset space, while enabling far greater transparency, control, and security for asset managers.

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A message from CoinDesk

The CoinDesk DeFi Index (DFX), measuring the investable DeFi market, is now available for investors watching decentralized finance.

It is the latest index by CoinDesk Indexes, the market standard for crypto assets since 2014. The DFX provides a market-cap-weighted index for a representative basket of DeFi-sector cryptocurrencies that is designed to be investable and replicable for professional investors.

Find out more at coindesk.com/indexes/dfx, or email indexes@coindesk.com.

Podcast episodes worth listening to:

Motion: It's a bad idea to make Bitcoin compulsory tender (George Selgin vs. Yves Bennaïm) – Richard Yan, “The Blockchain Debate Podcast.”

The Value of NFTs in the View of a Cybersecurity Lawyer – Christine Kim and Ben Edgington, “Mapping Out Eth 2.0.”

Turning Point: The Crypto Industry’s Battle Against the Infrastructure Bill, Feat. Jake Chervinsky – Nathaniel Whittemore, “The Breakdown.”

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