DeFi

June 27, 2022

Goldman and Morgan Creek Oogling Distressed DeFi Assets

Oh man, where to begin? It seems like every twelve hours, there’s some new major development in the DeFi space, specifically with one of the biggest crypto hedge funds, Three Arrows Capital.

Here’s a quick recap: 

Popular cryptocurrency lending and high-yield platform Celsius paused all customer withdrawals earlier this month, stoking fears that it may be insolvent. The initial trigger was the collapse of the algorithmic stable (lol) coin, TerraClassic USD ($UST.X). The result has been a contagion of exposed cryptocurrency companies and platforms. 

With Celsius at risk of bankruptcy, a leading investor group within Goldman Sachs ($GS) is reportedly circling the dying crypto firm and poking it with a stick to see if it’s dead yet. Goldman wants to raise $2 billion to scoop up Celsius’s assets on the cheap. However, another crypto lending firm, Nexo ($NEXO.X), already put in an offer last week. 

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Technically Speaking – March 5, 2024

March 5, 2024

Today, cryptocurrency platform/exchange/wallet Voyager ($VYGVF) served Three Arrows Capital a notice of default. Three Arrows Capital had until today to repay the entirety of a $650-ish million loan. Voyager did secure a $500 million Line of Credit from Alameda Ventures in the interim. 

Also, Morgan Creek Digital wants to get in on the poking wounded crypto firms with a stick game. BlockFi ($BLOCKFI.P) got a $250 million credit line from crypto exchange FTX last week, with the latter having the reported option to acquire BlockFi at no cost. But, of course, Morgan Creek already has exposure to BlockFi, so if FTX exercised the takeover, Morgan Creek would literally be up Schitt’s Creek.

We’ll keep you updated to who wins out and who gets screwed. 🤬

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Frogs, And Dogs, And BONKs Oh My

Memecoin madness is back, and it’s like deja vu. All over again, like deja vu. 🐶

According to the fine folks at Santiment, the spotlight’s on $PEPE, $FLOKI, $BONK, and a few others, all of which have decided to moon together. Price surges of over 500% and trading volumes that skyrocketed nearly 3,000%? Just another crypto memecoin insane bull run

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February 16, 2024

🤝 ETH to SUI

According to Wormhole, a cross-chain bridge for wrapped tokens and NFTs, more than $310M in assets migrated from Ethereum to the Sui ecosystem. The funds sent to Sui exceeded all other blockchains combined. 

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DeFi

June 4, 2023

Crypto 101: Understanding the Risks of Decentralized Exchanges (DEXs)

Like every technology, DEXs come with their unique set of risks. Let’s dive into some of the most prevalent ones.

Smart Contract Risk 📜

One of the most significant risks when dealing with DEXs revolves around smart contracts. These programmable transactions run the entire DEX infrastructure. If there’s a bug in the smart contract code, it might be exploited and lead to substantial losses. Make sure you’re using a DEX that has undergone rigorous smart contract audits to mitigate this risk.

The DAO hack is a classic example of a vulnerability in a smart contract. The Decentralized Autonomous Organization (DAO) was a form of investor-directed venture capital fund, but a bug in its smart contract was exploited by a hacker who siphoned off a third of the DAO’s funds (around $50 million at the time).

Impermanent Loss 🔄

As a liquidity provider in a DEX, you could face what’s known as ‘impermanent loss’. This occurs when the price of your deposited tokens diverges. The larger the divergence, the more you stand to lose. The loss only becomes “permanent” if the prices don’t return to their original state by the time you withdraw your liquidity.

Price Slippage 📉

High market volatility can lead to price slippage on DEXs. Slippage refers to the difference between the expected price of a trade and the price at which it’s executed. While some slippage is common, large amounts can lead to unfavorable trade outcomes.

If you were trying to trade a large amount of a low-liquidity token on a DEX, you could experience severe price slippage. For instance, if you attempted to sell 10,000 tokens of a small project, your sell order could significantly impact the price, causing you to receive less than you anticipated.

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