Tesla "Gives Up" on Bitcoin as Company Sells 75% of its Holdings
Market Movers
The largest coins by market cap were in the green for the week, highlighted by Ethereum rising over 20%
Fantom (FTM) was our pump coin of the week, rising north of 36%
Fantom is a directed acyclic graph (DAG) smart contract platform that provides decentralized finance services to developers (via CoinMarketCap)
Fantom’s smart contract separates itself from competitors through its relatively instant transaction speeds (under 2 seconds)
First Sip
If you’re already a crypto native, feel free to skip to “Table Talk.”
POWER OF THE POLYGON
In this section we’ve discussed L2 chains and this week we’ll be diving into Polygon—arguably the most established one on Ethereum. As a quick refresher, L2 solutions help with the scalability of PoW chains like Ethereum as they bundle transactions, which allows them to minimize the transaction fee. While many different kinds of scaling solutions exist, think of the bar tab example from Bitcoin Lightning for a simple example of one kind of L2 scaling mechanism.
Polygon initial scaling solution operates a different kind of L2 solution called a sidechain. Polygon runs a concurrent chain that validates using PoS and then reconciles with the Ethereum chain after a number of transactions. It is supported by the world’s largest NFT marketplace OpenSea and is used by large DeFi apps by market cap like Aave and Pool Together. (via Coinbase).
The Ethereum “Merge,” when the Ethereum blockchain converts from PoW to PoS, puts a clock on most Ethereum L2 solutions as they should become unnecessary. Polygon is in a unique position to maintain its utility as it is a blockchain in its own right that is currently using Ethereum L2 support as an access point to onboard users. Brilliant.
This week, Polygon announced their launch of another scaling solution called a ZK roll up and launched zkETH (via AMBCrypto). This should drive even more volume to the protocol. Polygon rose over 30% following the news and had slotted into position 12 on the list of largest coins by market cap (via CoinMarketCap). You can find out more about the powerful Ethereum L2 here.
Table Talk
TESLA SELLS $936M WORTH OF BTC
Tesla sold $936M worth of bitcoin, or approximately 75% of its holdings in the second quarter of 2022, as reported in the company’s earnings report this past Wednesday (via CoinDesk).
Although the move may seem extremely bearish for the entire crypto/Bitcoin community on a surface level, once you dive a bit deeper, you see that is not necessarily the case.
Tesla’s Much Anticipated Cybertruck
For instance, Elon Musk went on to say during the second quarter earnings call that the company sold the majority of its Bitcoin to both maximize cash position and as a response to the uncertainty of the COVID lockdowns in China.
He also went on to say, “this should not be taken as some verdict on Bitcoin.”
The price of bitcoin fell almost 2 percent immediately after the release of the earnings report, but soon rebounded following Musk’s comments on the earnings call.
NFT Buzz
OKAY BEARS NOT SO OKAY
OkayBears, a Solana-backed NFT that broke 24-hour sales volume records following its launch on April 26th has come under fire recently for some recent management mishaps.
The team deployed a “hibernation” initiative this past week where users could go to the NFT collection’s website, connect their respective wallets, and enter their bear/s into “hibernation.” The move was enacted to encourage holders to delist their bears from public marketplaces and ideally drive the price up for the bears.
However…
the move quickly backfired as holders, led by popular twitter user and owner of the second most OkayBears HGESOL, began tweeting about the issues present on the hibernation site: problems connecting wallets and bears awakening on their own (amongst other things).
The immediate reaction from “NFT Twitter” was filled with a landslide of “constructive criticism” towards the OkayBears team, mainly frustration from holders on how the team did not test out all possible engineering bugs before launching something they had been marketing for so long.
The end result?
The OkayBears team ended up taking down the original hibernation site and announced hibernation was still in route, this time via a much easier to operate manual check of which bears are hibernating.
The team’s misstep led to the floor price dropping, but not catering, for the week. Although the setback does not represent the ultimate outcome of the project, it does put a lot of pressure on the team to deliver on their next holder-based announcement.
Only time will tell if the NFTs iconic slogan, WAGBO (We are all gonna be okay), will hold its truth.
DeFi Demographic
MAKER DAO STABLECOIN AT RISK
One of the lauded hallmarks of the crypto community is that much of it is open source. While this has accelerated development as forking and building upon others’ implementations allows crypto projects to not have to re-implement something that exists, it has also allowed for blatant copycats. Some might argue that this allows for a beneficially competitive crypto economy as no one protocol can amass enough market share to truly dominate with many virtually identical product offerings. This isn’t incorrect, but creating an identical offering simply to sluff-off market share of a first-mover seems contrary to foundation crypto community principles.
Two weeks ago, Aave’s DAO voted to create an over-collateralized stablecoin called GHO (via Coin Telegraph). This week, Curve Finance followed suit where its CEO Michael Egorov hinted in an interview that it would also likely be creating an over-collateralized stablecoin (via Crypto Briefing). In response to this, Curve’s native token CRV rose over 21% in the 24 hours following the interview (via Decrypt).
Both of these announcements are a direct attack on the stablecoin model popularized by Maker DAO, which offered the first over-collateralized stablecoin DAI. DAI famously held steady during the UST collapse and though Maker DAO had issued a loan to the Celsius Network it was repaid shortly before the company filed for Chapter 11 Bankruptcy last week (via WSJ). It is bullish that we should see more liquidity entering stablecoin models that have proved (at least for now) structural stability. Still, these actions by both companies lie antithetical to the innovation core at the center of the crypto revolution: stealing an idea instead of building something new and developing the frontier.
Final Cup
Polygon announced their launch of another scaling solution and suddenly rose over 30%
Tesla sold 75% of its Bitcoin before stating that the move does not necessarily reflect its “verdict” on the cryptocurrency
The OkayBears NFT collection’s floor price dropped for the week as the team did not implement a bug-free site for their recent “hibernation” incentive for their NFT holders. It will be interesting to see how the team operates going forward as a response to their blunder
Maker DAO’s stablecoin appears to be at risk as Aave DAO and Curve Finance look to build their own over-collateralized stablecoins
Meme of the Week (via Reddit)
*** replace Ethereum with CryptoPongz
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.