Crypto Unbothered by the Federal Reserve
The largest coins by market cap were in the green for the week, headlined by Ethereum rising over 5%
Filecoin (FIL), the pump of the week, rose a staggering 71.78%
The popular decentralized storage system’s meteoric weekly rise may have been in large part due to digital asset venture capital firm Holon Global Investments announcing the launching of three new crypto funds: Bitcoin, Ethereum, and Filecoin (via ambcrypto)
If you’re already a crypto native, feel free to skip to “Table Talk.”
AN INTRO TO AVAX
In this section, we’ve talked about several protocols attempting to replace, or at least take market share from, Ethereum like Solana and Cardano. Avalanche (AVAX) is another Ethereum alternative that supports smart contracts written in the same coding language as Ethereum’s: Solidity. The use of Solidity is to minimize the barrier to entry for applications on Ethereum to transfer to Avalanche.
Avalanche’s biggest value add is targeted at Ethereum’s current greatest pitfall—transaction speed. Ethereum currently runs the Proof of Work (PoW) algorithm, which limits the transaction speeds to around 14 transactions per second and final transaction confirmation every 6 minutes (via Avalanche). In contrast, Avalanche supports an infinite number of transactions and final transaction confirmation in less than two seconds (via Avalanche). A big improvement.
It does this by having three separate blockchains that are distinguished by the three major transaction types on blockchains. The X-Chain handles exchanges, the P-Chain handles L1 and L2 blockchains built on Avalanche, and the C-Chain handles applications built on Avalanche. Each chain is specialized for that specific task, and this minimizes congestion while offering significant performance improvements in all categories.
Avalanche offers a powerful set of tools, but its main value proposition as an Ethereum killer is threatened by the “Merge,” (when Ethereum transisitions to PoS and its transaction speed rivals that of protocols like Avalanche) which has been pushed back several times but looks to be happening in September (via BitPay). Something to think about.
CRYPTO RALLIES AS FED RAISES RATE HIKES
In much-anticipated news, the Federal Reserve announced on Wednesday that they are raising rate hikes 0.75 percentage points, which takes its current benchmark range from 2.25% to 2.50% (via WSJ).
The increase in the federal funds rate means banks must charge each other more for short-term loans, which in turn makes it more expensive for consumers to borrow money in the open market.
In response to a question from a reporter regarding raising rate hikes in the future, Jerome Powell answered, “While another unusually large increase could be appropriate at our next meeting (in September), that’s a decision that will depend on the data between now and then,” a classic answer, no-answer (via Bloomberg).
Powell also stated that his team would slow down rate hikes at some point; however, such a move will be determined on a meeting by meeting basis.
Following the meeting, the Nasdaq jumped 4% the rest of Wednesday while Bitcoin jumped from $21K to above $23K during the same time frame—a bullish reaction to the opaque guidance from Powell.
FC BARCELONA ENTERS NFT MARKET
FC Barcelona, one of the largest soccer clubs in the world (valued at $4.8B) sold its first NFT for $693K in an auction held in New York this past week.
The NFT, named “In a way, immortal,” depicts (in video format) one of the club’s most iconic players’ Johan Cruyff’s outstanding goal in 1973.
The owner of the NFT will now become a Barca Digital Ambassador, granting them various VIP benefits and experiences with the club (via fcbarcelona).
FC Barcelona plans to release additional NFTs over the coming months containing other memorable club moments. The opportunities for NFTs and web3 are endless.
Still not paying attention?
NIRVANA FINANCE HACK
Yield protocol Nirvana Finance was drained of all but ~7 cents of its liquidity pool after another flash loan attack (via CoinDesk). The hacker came away with just under $3.5M in DAI after the attack.
Like the Beanstalk attack we discussed in April, the hacker leveraged a flash loan through Solend to access $10.25M USDC for an instant (via SolanaFM). This was then converted to an equivalent amount of ANA. Then, through manipulation of the Nirvana ANA pricing oracle, the hacker was able to increase the price of ANA by about 30% (via Cryptonomist). This allowed the hacker to drain an additional $3.5M from the Nirvana Fiance Treasury when the ~$10M ANA position was liquidated into USDT (via Cryptonomist).
As a result of the hack, Nirvana’s protocol token ANA lost roughly 92% of its value at the time of this writing, and its dollar stablecoin NIRV has cratered to 8 cents in value (via CoinMarketCap, CoinMarketCap). Nirvana Fiance had scheduled an audit of their protocol through security research firm Sec3, but this did not come in time for the hack (via Nirvana Finance). We’ll see if this protocol can recover from such a heavy blow.
The Federal Reserve raised its benchmark interest rate by 0.75 percentage points. Equities and crypto reacted favorably due to both the conservative number and some of Powell’s quotes during Wednesday’s meeting.
FC Barcelona sold its first NFT for just less than $700k. The link between NFTs and sports is both inevitable and just getting started.
Nirvana Finance was hacked via another flash loan attack where the protocol lost its entire treasury, causing its stablecoin and token to crater in value. One wonders if the main use for a flash loan is enabling hacks.
Meme of the Week (via CryptoPongz)
The CryptoPongz NFTs collection launching this Friday via a free mint. Get one before they’re gone.
Pat + Ari ✌️
Disclaimer: None of this is investment advice, financial advice, or trading advice. CRYPTOPONG does not endorse any of the cryptocurrencies, DeFi applications, or NFT collections mentioned in this article. Perform your own due diligence and/or consult a financial advisor before investing. All of the opinions expressed here are our own unless cited otherwise.