1. Summary of Industry Dynamics
This week, the crypto market performed extremely strongly. Bitcoin was once again labeled as digital gold after the collapse of many traditional financial markets. The trading volume of centralized exchanges soared to 46 billion USD, the highest this year. Bitcoin's weekly increase was also one of the best in Bitcoin's history (Beijing time statistics). As of the time of writing, Bitcoin closed at 28021.92, successfully reaching the target position of 28000, up 35.34% during the week, with an amplitude of 36.49%; Ethereum closed at 1818.63, up 23.16% during the week, with an amplitude of 26.17%. Last week's sharp increase in Bitcoin also caused the BTC Dominance index to soar from 43% to more than 47%. Usually, this represents two signals, either a healthy market in an upward channel, because it indicates that the bubble in the market is relatively low; or it represents that the market is extremely risky and the altcoins are sold off in large quantities. This phenomenon has occurred in the past crypto market. At present, the market is more inclined to the former. If the Federal Reserve gives a dovish speech this week, the market will continue to grow.
The U.S. stock market performed well this week, with the S&P and Nasdaq closing higher for four consecutive days. After the U.S. government provided First Republic Bank with $30 billion in relief, and Credit Suisse received a $54 billion loan from the Swiss National Bank on Thursday, the market's concerns about the crisis were calmed. Although these short-term liquidity arrangements are not enough to fundamentally solve Credit Suisse's problems, they can help Credit Suisse gain time for asset restructuring, and the market began to rise generally. The Nasdaq crossed multiple moving averages with a positive line, and retreated to the annual line on Friday. If we ignore the bank defaults this week, this week's trend can be seen as a V-shaped reversal; the S&P also approached the 4,000 point mark again, but had a deeper correction on Friday. The focus of the market this week is on the Federal Reserve's interest rate meeting on the 21st. The importance of this meeting will be far greater than the previous ones. The Fed's attitude will determine whether this potential "financial crisis" will be stopped at the right time or develop in a more serious direction. If the interest rate hike is really suspended, the market will usher in a big surge, but it is more likely that the interest rate will be raised slightly by 25 bp, and Powell will release a mild speech to appease the market, and mention the Fed's determination to rescue the banking crisis and ensure the safety of depositors. The market needs to smell the interpretation of stopping the interest rate hike, and everything will be revealed on Wednesday.
Industry data
1) Stablecoins
According to glassnode data, as of March 18, 2023, the combined supply of the top four stablecoins (USDT, USDC, BUSD, DAI) was approximately 126.498 billion, with little change from last week, a slight decrease of approximately 350 million (-0.27%), and the outflow of funds from the currency market has stabilized.
Note: In this week's glassnode data, the supply of DAI has returned to normal, and last week's data errors have been restated.
Among the three major fiat stablecoins, the supply of USDT continues to rise. USDT increased significantly this week by about 3.535 billion (4.85%), and the upward trend accelerated, with a market share of 58%. The recent increase in USDT supply is speculated to be due to the return of some funds after exiting through USDC and replacing them with USDT.
The supply of USDC has dropped significantly this week by about 3.15 billion (-8%). Since the Silicon Valley Bank incident, the supply of USDC has fallen sharply for two consecutive weeks. After a brief depegging, USDC has now returned to its peg of $1. Although the price has recovered, it seems that the damaged market confidence and sentiment will take more time to repair.
The supply of BUSD continued to decline at a slower pace this week, decreasing by only about 188 million (-2.24%). As Paxos has been banned from minting BUSD, the supply of BUSD is expected to continue to decline. BUSD is expected to exit the stage of history, and Binance may choose TUSD as its replacement. Previously, Binance announced that it would convert BUSD held in the User Security Asset Fund (SAFU) into TUSD and USDT; CZ also announced on Twitter that it would enable the zero-fee policy for BTC-TUSD and abolish some zero-fee spot trading pairs that previously applied to BUSD.
TUSD (TrueUSD) is a centralized collateral stablecoin issued by TrustToken and collateralized by the US dollar at a 1:1 ratio. According to TrustExplorer data, the collateral value of TUSD is 2.035 billion US dollars, which can cover its issuance of 2.029 billion. Affected by the BUSD and USDC events, the supply of TUSD has increased significantly since March (mainly minted by Binance), from about 1.1 billion at the beginning of the month to the current 2.029 billion, an increase of 84.45%, and is currently the fourth largest fiat stablecoin.
Overall, the net outflow of funds in the currency market has eased, but market sentiment has still been damaged to a certain extent. With limited incremental funds, it is difficult to expect a full bull market. Under the game of existing funds, sector rotation is expected to occur.
2) BTC Miner Balance
The BTC miner address balance shows the total BTC holding balance marked as miner addresses on the chain, including Foundry USA, F2Pool, AntPool, Poolin, Binance and other addresses.
This data is usually used to judge miners' interest in the current BTC price. When the miner's balance increases, it usually means that the chips are in a state of accumulation; when the miner's balance decreases, it indicates that miners are selling or pledging their BTC.
According to OKLink data, as of March 19, the balance of miners did not change much compared with last week. After the BTC price rose by more than 20% in a single week, there was no obvious shipment and exit of miners.
As one of the representatives of Smart Money, miners began to be more vigilant before the decline (February 28) and partially cashed in their profit chips; but remained on the sidelines during the subsequent decline until March 8 when BTC began to fall sharply. (BTC price is about 20,000) and accumulated chips again, and have maintained it till now (BTC price is about 27,000). Observing from the data of the past six months, although the absolute value has not changed much, the timing is significantly ahead of the market. If you follow the timing operation on a weekly basis, you can seize the two larger periods of BTC in January and March this year. rise.
3) ETH deflation data
As of March 19, according to ultrasound.money data, the supply of ETH this week decreased by about 5,620 compared to last week. Since the completion of The Merge, the supply of ETH has decreased by 66,000 in total. Based on the data of the past week, the annualized inflation rate is -0.24%, which is lower than -0.7% last week. After the USDC incident subsided, the deflation rate has returned to normal.
During the rising market last week, BTC's market share and exchange rate increased significantly, relatively outperforming ETH, but this situation will not last for a long time. In the past two years, the ETH/BTC exchange rate has always maintained a wide range of fluctuations between about 0.05 and 0.08. After BTC trades sideways at a high level, ETH may usher in a compensatory increase.
Compared with ETH under the POW mechanism, the supply under the POS mechanism has been reduced by about 2.01 million coins. In terms of US dollars, this part of the selling pressure is nearly US$3 billion.
2. Macro and Technical Analysis
The market did not approach the previous bottom due to negative factors, but instead hit a recent high. We believe that after stabilizing above 25,000u in the short term, it will have a chance to touch 28,000.
Two-year US Treasury bonds fell sharply after the black swan event in the market, and interest rate cuts are expected to begin at the end of the year
Nasdaq rebounds above 11,500, but Dow fails to rebound
arh999：0.64
The number of addresses holding coin is rising steadily with more than 10 addresses
After the number of addresses holding coins jumped, it began to retreat this week
III. Summary of Investment and Financing
Investment and Financing Review
From March 14 to March 20, 2023, the crypto VC market disclosed 16 investment and financing events, with a cumulative financing amount of more than US$67.8 million; (https://www.rootdata.com/Fundraising)
During the reporting period, there were 3 events with financing amounts exceeding USD 10 million:
Organization News
During the reporting period, there were 3 events with financing amounts exceeding USD 10 million:
The latest developments of FTX’s digital distressed asset claims market:
At present, the FTX incident has exceeded the initial 120-day protection period of the first phase. The original deadline was March 11. Last week, FTX applied to the US court to extend the deadline for submitting a bankruptcy reorganization plan to September 7 and hoped to get approval. They hope to extend it for another 6 months to improve and submit an implementable plan, and said that the company needs more time to continue to sort out its financial situation. At the same time, they also announced that they will soon announce the details of assets and liabilities. At present, FTX US and FTX International have not publicly disclosed any other substantial progress.
The bond prices in the OTC market remain in the range of 15-20%, with no changes in the past two weeks, and the upward trend has been temporarily halted.
2. FTX and its affiliated debtors submitted financial statements to the bankruptcy court
FTX and its affiliated debtors submitted financial statements to the bankruptcy court, which showed that Alameda Research transferred and loaned up to $3.2 billion to FTX founders and executives, including Sam Bankman-Fried (approximately $2.2 billion), Nishad Singh (approximately $587 million), Gary Wang (approximately $246 million), Ryan Salame (approximately $87 million), John Samuel Trabucco (approximately $25 million), and Caroline Ellison (approximately $6 million).
These amounts do not include more than $240 million used to purchase a luxury home in the Bahamas, political and charitable contributions made directly by FTX Debtors, and transfers of assets to non-debtor subsidiaries in the Bahamas and other jurisdictions.
While some of the property purchased with these transferred assets is already under the control of FTX Debtors or government authorities with which it is working, it is currently impossible to predict the amount and timing of eventual monetary recovery. FTX Debtors is investigating the recipients of these transfers and their beneficiaries for the reasons for the transfers.
3. The latest information on the balance sheet provided by the creditors committee:
news:
（1）First Republic Bank
First Republic Bank has over $70 billion in unused liquidity and is in very strong financial condition
First Republic Bank, which was nearly implicated in the collapse of SVB last week, said it had further strengthened and diversified its financial position by obtaining additional liquidity from the Federal Reserve and JPMorgan Chase.
According to reports, a total of 11 banks injected funds into First Republic Bank last week. Bank of America and JPMorgan Chase each invested $5 billion, Goldman Sachs and Morgan Stanley each invested $2.5 billion, while Bank of America, Truist, PNC, State Street and Bank of New York each invested $1 billion. According to the latest data, FRB has confirmed that it will be injected with a total of $30 billion and has now escaped from its predicament.
All unused liquidity funds of FRB exceed $70 billion, and more liquidity can be obtained through the "Bank Term Funding Program" announced by the Federal Reserve. First Republic Bank founder Jim Herbert and CEO Mike Roffler said that the bank's capital and liquidity conditions are currently very strong, and its capital is still far above the regulatory threshold. First Republic Bank was suspended twice last week due to excessive market volatility, and has now resumed. The closing price on Thursday was $34.27. The closing price on Friday had a relatively large drop after the release of the capital injection information, and the current price is $23.03.
(2) Dynamic tracking of SVB non-performing assets
SVB Financial (SIVB) confirmed that Silicon Valley Bank had sold a portfolio of securities with a total book value of $23.97 billion to Goldman Sachs (GS) before it was closed by the Federal Deposit Insurance Corporation last week. The sale of the portfolio resulted in a net loss of about $1.8 billion for Silicon Valley Bank. The portfolio was sold to Goldman Sachs at a negotiated price. Meanwhile, Apollo Global (APO), Blackstone Group (BX) and KKR (KKR) are considering buying loans held by Silicon Valley Bank, that is, collecting SVB's non-performing assets. SVB held $73.6 billion in loans as of the end of last year. In addition, although the auditor missed signs of impending financial problems, KPMG still insisted on auditing SVB and Signature. Analysts believe that most large banks are not at risk of contagion.
5. Crypto Ecosystem Tracking
Data collation of each sector
NFT
Blue chip index: There was a cliff-like drop on the 13th, mainly due to the price drop of doodles by more than 30% (the founder community proposed that we are no longer an "NFT Project"), and also led to a series of blue chip NFTs falling simultaneously. The role of NFT is essentially to fix liquidity. The price increase of blue chip NFT needs to be based on the flood of liquidity. In the current situation of liquidity shortage, the price of blue chip NFT is relatively unstable.
Market value & transaction volume: The overall market value shrank by nearly 3%, and the transaction volume shrank by more than 24%.
Traders: Holders remain unchanged, traders shrink by more than 20%
Top collections: Cryptopunks and BAYC are far ahead. It is worth noting that after Cryptopunks was opened to Blur, more than 20 punks have completed their first transactions this year.
Gamefi Chain Games
Overall review
Overall, the Gamefi industry has been significantly affected by the recovery of the market this week, with its market value rising.
Judging from the token price, the top 10 blockchain game tokens by market value all increased, and most of the increases were above 10%.
Judging from the on-chain contract interaction volume, there are many highlights this week. Among the top ten active blockchain games, the interactive activity increased by 70% in the past week. Among them, the number of Hunters players increased significantly, up 890% (new game started testing). Iskra increased by 348% (new game 3KM was launched), and Benji Bananas increased by 228% (season settlement rewards, and new activities were launched at the same time)
DeFi & Public Chain Track Data
As of writing, DeFi TVL is 48.89B, having bottomed out on the 13th. The top five protocols by TVL on Wednesday were: Lido, MakerDao, AAVE, Curve, and Uniswap. Lido and Curve rose 23.23% and fell 4.94% this week, respectively.
From the perspective of public chains, the top three chains in terms of TVL this week are ETH, Tron, and BSC. Arbitrum and Optimism increased by 2.52% and 6.08% respectively this week, ranking fourth and sixth respectively.
This week's key events & projects
Salesforces and Polygon Collaboration
Salesforce has partnered with Polygon to develop an NFT-based loyalty program. Salesforce will help its customers join Polygon through its management platform to create an NFT-based loyalty program. Salesforce said that "most Salesforce customers use Ethereum or Polygon."
Salesforce launched the Web3 product suite, including NFT loyalty program management products, API product Web3 Connect, and NFT Management, a platform that allows companies to create and monitor their NFT collections and blockchain data through the Salesforce interface.
NFT lending protocol Paraspace under attack
Introduction: Last week, the NFT lending protocol ParaSpace suddenly said that it had observed a suspicious transaction and had suspended the entire ParaSpace protocol as a safety measure. Currently, ParaSpace's contract cannot conduct any transactions, including withdrawals, deposits, and liquidation activities. BlockSec then tweeted that it had prevented an attack on the NFT lending protocol ParaSpace, saving 2,900 ETH assets, and hoped that ParaSpace would contact it as soon as possible.
Specific hacker attack process:
The root cause of the attack on the NFT lending protocol ParaSpace occurred in the function scaledBalanceOf() of the contract 0xddde38696fbe5d11497d72d8801f651642d62353, which is used to calculate the user's collateral through the supply() function. However, by manipulating the number of APE tokens in the function getPooledApeByShares(), scaledBalanceOf() can return a large value. Users can have a large amount of collateral and use it to borrow more assets.
The hacker obtained a flash loan of 47,111.35 WSTETH from Lido.fi, and then created a new contract to borrow 1.84 million APE with about 6,000 WSTETH as collateral.
Then, 1.84 million APEs are transferred to the original attack contract 0xc181, and the 0xc181 contract calls 1.84 million APEs to mint 1.84 million derivative tokens cAPE. This step is repeated 8 times until cAPE is exhausted.
The hacker spent 1,334 ETH to exchange for 491,166 APEs, called withdraw(1.84M) to obtain an additional 1.84 million APEs, and currently holds about 2.3 million APEs.
In the ParaSpace compound protocol, the hacker would call scaledBalanceOf() to check the user’s collateral before lending out assets. However, due to the price manipulation vulnerability, the hacker borrowed more money.
The hacker deployed a contract to try to attack ParaSpace, but failed due to an error in estimating the gas fee. BlockSec later discovered the contract and copied it to prevent the attack. The hacker thought BlockSec was also a hacker and asked BlockSec if he could get back his 0.71 ETH gas fee.
Mole
Mole provides users with safe investment products of different risk levels, mainly covering the following three products:
Savings
Savings provide users with the most stable investment returns. Through Mole's savings smart contract, users deposit their token assets and obtain two types of returns. Savings may not be the product with the highest rate of return, but it is the most stable.
Through smart contracts, the Mole protocol lends the deposits of savings users to users of "leveraged yield farms", provides leveraged funds to users who like to increase leverage, and charges them loan interest, which constitutes a source of profit from savings income.
The profit source of savings is very stable, and Mole has a strong enough security mechanism to protect the safety of users' savings. After borrowing the loan, the leveraged yield farm cannot withdraw the loan for other purposes, but needs to use it in the Mole smart contract for a specific purpose, which guarantees the safety of the deposit users' funds. In addition, the Mole protocol has a strong liquidation function, which is enough to provide strong security.
Leveraged Yield Farm
Mole Leveraged Income Farm makes full use of Mole's savings, leverages and amplifies its investment results, and obtains greater investment returns while paying a certain amount of loan interest.
**Source of income:** The income of Mole Leverage Income Farm is divided into:
**Yield Farm Rewards:**Mole leveraged yield farm will use the user's tokens as margin and borrow funds from the savings pool as leverage funds. Then form the liquidity market-making trading pairs required by the distributed exchange Dex. Dex will reward the funds that provide liquidity market-making for its exchange, which constitutes the yield farm rewards of Mole Farm.
**Transaction fee rewards: **Being a liquidity market maker on Dex, while obtaining yield farm rewards, you can also reap the benefits of transaction fee rewards issued by Dex. The larger the trading volume of the trading pair pool, the more transaction fee rewards will be returned to users who provide liquidity market making.
**Borrowing interest:** When users borrow money from the savings pool to increase leverage, they need to pay a certain amount of borrowing interest to the savings pool.
Mole's leveraged yield farm can use a variety of strategies such as dual stablecoin strategy, unleveraged strategy, bull market long strategy, bear market short strategy, balanced strategy, etc.
fund
Mole currently provides robust dual stablecoins, neutral market volatility risks and one-time exposure, and multiple types of funds that follow the fluctuations of mainstream currencies, providing users with different risk preferences with a relatively rich choice.
6. Team News
Last Thursday, JZL Garden invited Aaron Zhou, partner of Han Kun Law Firm, and Bradley Max, Claims Market Director, to discuss how to gain more benefits for creditors after the collapse of the cryptocurrency exchange FTX.
about Us
JZL Capital is a professional institution registered overseas, focusing on blockchain ecosystem research and investment. The founder has extensive work experience and has served as CEO and executive director of many overseas listed companies, and has led and participated in eToro's global investment. Team members come from top universities such as the University of Chicago, Columbia University, University of Washington, Carnegie Mellon University, University of Illinois at Urbana-Champaign, and Nanyang Technological University, and have served internationally renowned companies such as Morgan Stanley, Barclays Bank, Ernst & Young, KPMG, HNA Group, and Bank of America.
【Disclaimer】The market is risky, so be cautious when investing. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Investing based on this information is at your own risk.
