Circle & Concord Scrap Their SPAC |
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| The Circle public offering is officially off.
Circle, the issuer of the popular stablecoin USDC, originally planned to enter the stock market via a merger with the special purpose acquisition company (SPAC) Concord Acquisition Corp. The merger deal valued Circle at $9 billion as of February 2022, an absolutely gargantuan number for a crypto company.
Unfortunately, that high valuation could not save Circle’s coming out party.
Although we don’t know the exact reason the merger was called off, that doesn’t mean we can’t speculate.
Circle’s valuation was extremely high, and it was made at a much different time. In February, the total crypto market cap was hovering around $2 trillion. It now sits at $869 billion.
We previously talked about Circle having a potentially bloated valuation in 2021 when it was priced at $4.5 billion. Now, even with reserve interest income of $274 million and net income of $43 million in Q3, a $9 billion price point seems a bit high.
Couple this with Binance’s BUSD eating at the supply of USDC, and you can see why a public offering might not be the best plan right now.
This canceled SPAC follows a string of other crypto SPACs that have been canceled this year. For example, both Prime Blockchain and eToro both called off their public listings at $1.25 billion and $10 billion valuations, respectively.
Who’s next? We wouldn’t be too surprised if we see Bullish cancel it’s $9 billion SPAC with Far Peak Acquisition (FPAC.N) soon.
Circle and Concord now have until January 2023 to either consummate a combination or seek a shareholder vote to extend the due date.
With having recently raised $400 million and with a strong partnership with Coinbase (COIN), we actually believe that Circle has a solid footing and can survive being private into the future. |
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Stripe Launches Fiat-to-Crypto On-Ramp |
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| Popular payment processor Stripe, which has been valued as high as $95 billion, is launching a fiat-to-crypto on-ramp, allowing crypto companies to make it easier for customers to interact with their services.
And it’s kind of a big deal.
The Ramp
Getting funds on-chain and into web3 applications is a major pain for users.
The normal flow is to go from your bank account, to an exchange, and finally to a web3 wallet. It’s not fun, and it’s a major hurdle toward mass DeFi adoption.
The ideal method would be to skip the exchange and go directly from your bank account to the DeFi app. Not only would it be easier, but it would be safer, as you wouldn’t need to take the risk of keeping money on an exchange (cough, FTX, cough).
That is exactly what Stripe’s on-ramp is enabling.
The ramp will function as a customizable widget that directly plugs in DeFi apps, with Stripe handling all KYC requirements, payments, fraud, and compliance.
With the development, the only thing DeFi developers will have to worry about is making great apps.
Why Is This Important?
Crypto adoption continues to be the most important factor for the health of the crypto ecosystem.
Sure, there are hundreds of millions of people buying and selling crypto on exchanges, betting on the price to go up. But focusing on merely prices leads to short-sightedness.
What we really need in the system is people using cryptoassets. Whether that be through money like bitcoin, smart contracts like ethereum, or directly in DeFi applications.
Stripe’s new move, as a trusted payment provider, could lead to applications that previously weren’t focusing on crypto to begin exploring use cases in their apps in new and intriguing ways. |
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Are you ready for “The Great Unraveling?” |
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| Most Americans have no idea who’s really behind rising inflation and falling stocks. It’s not Putin. Not Trump. Or Biden. It’s not Congress – or even Wall Street. It’s someone much worse. And nearly 30 years of their shenanigans are now starting to come undone.
Bottom line: this could ultimately impact your Social Security, taxes, and send your investments even lower.
Here are the 5 simple moves you can make today to help prepare. |
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Disaster on Maple Finance |
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| The FTX contagion continues, with DeFi's uncollateralized lending platform Maple Finance the latest to run into issues.
Let’s break down what’s going on.
What is Maple?
As quickly mentioned in the intro, Maple is an uncollateralized lending platform. This means that institutional borrowers can borrow money on Maple without posting collateral, instead relying on what essentially amounts to an honor system to ensure the loans are repaid.
As some of you may be aware, this is normal for traditional finance but rare for DeFi. In traditional finance, an intricate system of creditworthiness and legal repercussions enable uncollateralized lending. In DeFi, there is none of that, so most lending platforms are overcollateralized, meaning that the borrower has to post more collateral than the value of the loan, ensuring that the lender stays solvent in the case of a default.
Maple is learning why most other platforms do it this way… the hard way.
Orthogonal Pain
One of Maple’s largest borrowers is the trading firm Orthogonal Trading, with $36 million of outstanding loans between USDC and ETH pools. Considering that this accounts for 80% of the USDC pool and 18% of the wETH pool, these are no small figures.
Following the FTX implosion, Orthogonal pledged that everything was ok on their end.
As we have seen time and time again, this was a lie.
In reality, Orthogonal’s funds have been stuck on FTX since the exchange collapsed. Those in the pool have now lost millions.
An Uncertain Future
This is the latest in a string of disasters for uncollateralized lending platforms. - Babel Finance defaulted on a $10 million Maple loan in June
- FTX exposure caused Auros Global to miss a payment on a $3 million Maple loan last week
- Competitor uncollateralized lending platform TrueFi got hit with $4 million in bad debt in October when Blackwater and Invictus defaulted on loans.
It’s unfortunate that uncollateralized lending platforms have been so far unable to avoid bad debt. Overcollateralized lending is capital inefficient, and uncollateralized lending could be a DeFi gateway drug for institutions.
However, it will never reach its full potential unless they figure out a way to ensure the safety of lenders’ funds. |
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Former CBOE Legend Shares the “Ugly” Trades he’s using to make 146% average gains every 10 days |
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| Mark Sebastian is a legendary market maker with a 10+ year career in the pit of the CBOE, making millions for himself and his clients by using a specific form of arbitrage, where trades only cost $100 but can return up to 9,030%.
We’re going to unveil Mark’s arbitrage secret in a special online Livestream from Austin, Texas. He’s even going to share two ugly trades he’s putting his own money into. He’ll show you how you can do the same, step-by-step.
You can reserve your online spot for free on this page. |
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Nexo Reaches Dead End With Regulators; Leaves U.S |
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| Crypto lender Nexo is officially ending its Earn Interest product in the United States after talks with state and federal regulators reached a “dead end”. Over time, Nexo will be phasing out its products and services to U.S.-based customers.
If you are currently a Nexo customer, you will still have access to other products and services.
With that being said, we here at CoinSnacks recommend withdrawing and taking self-custody of your assets.
If you decide that self-custody isn’t for you (it should be), we recommend moving to a regulated exchange such as Coinbase, Kraken, or Blockchain.
In the long run, this is probably a good thing for the U.S. crypto market. We’ve already seen spectacular crypto lender failures this year with Celsius and BlockFi, and although Nexo isn’t publicly in danger, there are some red flags.
Chief among these red flags is Nexo’s interest rates. They far exceed what can be earned in DeFi. How is that possible?
We honestly have no idea. But as they say: if you don’t know where the yield comes from, you are the yield. |
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