Crypto avoided the common weekend price shenanigans, but neither bulls nor bears wanted to take control today. Very flat price action to start the week of Thanksgiving. 🦃
In today’s Litepaper, we’re looking at why big money is looking at DeFi for maximizing returns.
Also on deck: Tether freezes $225 million of USDT tied to human traffickers, Argentina’s new pro-BTC pres, and a look at CoinDesk’s sale.
Here’s how the market looked at the end of the trading day:
|Total Market Cap||$1.389 Trillion||0.02%|
|Altcoin Market Cap||$656 Billion||-0.22%|
|Hedera Hashgraph (HBAR) – Biggest Winner||
|Avalanche (AVAX) – Biggest Loser||$21.14||-7.39%|
A not-so-obvious secret in the crypto world, especially among well-capitalized individuals and entities like hedge funds and institutions, is the allure of Decentralized Finance (DeFi). 💋
Despite traditional finance and crypto critics scoffing at DeFi since the market peak in August 2021, savvy players with a long-term perspective have quietly accumulated boatloads in the space.
In our December 30, 2022, analysis of the Stocktwits Crypto Indices, DeFi, often ridiculed and overlooked, emerged as the fourth best-performing index of 2022 out of eleven. Fast forward to this year, and DeFi is leading the pack as the top-performing index, boasting a nearly 200% increase, closely followed by the Proof-Of-Stake Index at +196%.
Growth vs. Yield In Crypto vs. TradFi
In traditional finance (TradFi), capital typically shifts back to growth sectors like the stock market when yields diminish. However, this trend isn’t mirrored all the time in crypto. For newcomers, this is where DeFi becomes particularly enticing. 😃
Despite being relatively new and about 75% down from its all-time highs, DeFi offers compelling opportunities. Many high market cap cryptocurrencies in DeFi, DEX, Lending, and Proof-of-Stake categories offer in-kind yields exceeding 8%.
Consider the BDCcompany $PSEC, popular for its monthly dividend, which you get in $$$. Unlike receiving cash dividends, ‘in-kind’ means receiving the asset itself. For instance, in staking (a key component of DeFi), rewards are paid in the staked asset. Our Crypto 101 article on staking delves deeper into this.
Take, for example, a Cardano wallet’s staking rewards shown on Cardano PoolTool:
The appeal of in-kind rewards lies in the potential appreciation of the underlying asset, which is still significantly below its peak value.
Imagine receiving 31.42 $ADA, valued at about $8.11 (or roughly $0.258 per ADA). Fast forward a month, and that 31.42 ADA is now worth $12.20, a 50.43% increase. 👍
DeFi and Crypto: High Reward, High Risk, Guaranteed Heart Burn
While the above example is promising, glancing at any crypto chart over the past two years reveals the sector’s volatility and risks.
However, on-chain data suggests that some entities with substantial wallets view the past year as an opportune time to acquire assets at a discount, aiming to capitalize on their growth and yield potential. 😍
In a landmark collaboration, Tether ($USDT) and crypto exchange OKX have teamed up with the U.S. Department of Justice (DOJ) to freeze a record $225 million in USDT, linked to a Southeast Asian human trafficking ring involved in global romance scams. 👊
This operation, announced on Nov. 20, represents the largest USDT freeze in history.
The funds, discovered in multiple self-custodial wallets, were identified during an investigation by blockchain analytics firm Chainalysis. Tether and OKX played a pivotal role by alerting the DOJ to suspicious fund movements, leading to the DOJ’s request to freeze the involved wallets.
Tether has clarified that these wallets are not associated with its customers and affirmed the legality of the freeze. The company is committed to collaborating with law enforcement and the wallet owners to resolve the situation. 🚨
Tether has seized around $835 million in assets tied to thefts and other illegal activities in its history.
Paolo Ardoino, CEO of Tether, emphasized the firm’s commitment to preventing illegal crypto usage and enhancing safety standards in the crypto industry. Similarly, OKX’s Chief Innovation Officer, Jason Lau, highlighted the exchange’s dedication to partnering with law enforcement and industry stakeholders to ensure trust and public welfare. 👍
Argentina decided to play a wild card in its presidential election, bringing outsider Javier Milei to the big chair. Milei is an anarcho-capitalist who’s just clinched the presidency with a whopping 55% of the votes. 🇦🇷
Now, here’s where it gets juicy for the crypto crowd. Milei is a big fan of Bitcoin – like, “write love songs about it” level of fandom. He’s all about decentralized finance (DeFi) and isn’t shy about throwing shade at central banks.
But let’s not get ahead of ourselves. Milei hasn’t exactly rolled out the red carpet for Bitcoin as legal tender in Argentina. However, his game plan of giving central banks the cold shoulder and cozying up to decentralized financial systems has given Bitcoin a serious adrenaline rush.
Let’s see if Milei’s presidency turns into a crypto success story. 📓
WSJ: Bullish, the crypto exchange led by former NYSE President Tom Farley. Ironically, the deal was all cash – and not in crypto. The price? There are only guesses. 🐂
Digital Currency Group, CoinDesk’s parent, bought it for $500,000 in 2016. And earlier this year, a $125 million deal for CoinDesk fell through.
Bullish is keeping CoinDesk’s management, led by Kevin Worth, and promises business as usual. An editorial committee chaired by ex-Wall Street Journal editor Matt Murray is set to ensure journalistic independence.
Launched in 2021 with backers like Peter Thiel, Bullish is also eyeing the remnants of FTX. CoinDesk, with its media, events, and indexes, pulled in $50 million last year. Farley sees it as a key player in a crypto resurgence.
The plan? Invest heavily in CoinDesk, expanding its reach to Asia. 📰
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