August has been a notable month in the cryptocurrency sector, featuring significant shifts and developments. The Bank of Japan's unexpected adjustment to its yield curve policy created waves across global financial markets, impacting crypto volatility significantly. Lido launched a new institutional staking platform, expanding its influence in the Ethereum ecosystem. Meanwhile, MakerDAO undertook a strategic rebranding to "Sky Protocol," reflecting its ambitions for a more scalable and regulatory-compliant framework. These key developments underscore a period of adaptation and strategic shifts within the financial and crypto landscapes.
August started off with high volatility as the Bank of Japan (BoJ) unexpectedly adjusted their yield curve policy, effectively allowing interest rates to rise. This move shocked financial markets, especially because many Japanese investors had traded their loaned Yen for US dollars to exploit a higher bond yield. This caused a significant unwind of the previously popular yen carry trade, leading to high volatility also in crypto markets.
On a more positive note, the Brazilian Securities and Exchange Commission (CVM) approved the world's very first spot Solana ETF. This ETF will use the CME CF Solana/Dollar reference rate F, as its pricing benchmark, which is a standardized index for a reliable value of Solana in US dollars. This rate is based on aggregated data from a variety of the biggest cryptocurrency exchanges where this trading pair is offered. Aside from Solana making major improvements in the network's uptime, it experienced a minor outage this month due to a bug in a validator's software, leading to consensus failure and network instability. Furthermore, infamous cryptocurrency exchange Celsius is suing Tether based on claims that Tether improperly redeemed a large amount of its stablecoins from Celsius, when the exchange was already insolvent. In doing so, Tether may have violated the terms of their agreement and Celsius is now demanding $2.4 billion worth of BTC. In addition to that, Celsius bankruptcy plan administrator has already distributed over $2.5 billion to creditors as part of the company’s restructuring process.
On top of the spot ETH ETFs going live last month, BlackRock collaborated with Nasdaq and filed for options trading on the iShares Ethereum Trust. These options are meant to enable lower-cost tools to hedge spot ETH exposure via these options. Other large asset managers have also been active, Franklin Templeton launched their on-chain US Government Money Fund on Arbitrum. This collaboration with Arbitrum allows investors access to the fund via digital wallets to improve transparency and efficiency. Another large asset manager, Grayscale, has launched three new crypto trusts: the Bittensor Trust, the Sui Trust, and the MakerDAO Trust. These trusts allow investors the option to access a broader range of digital assets.
Another major development is Lido having launched ‘Lido Institutional’, which is an ETH liquid staking solution tailored for institutional players such as custodians, asset managers, and exchanges. Currently Lido is the largest liquid staking protocol and controls over 28.5% of all staked Ether. Despite the SEC claiming they are selling unregistered securities, Lido continues to expand their offerings.
Secondly, MetaMask is collaborating with Mastercard and Baanx to offer a blockchain-based debit card. This card would allow users to spend cryptocurrencies directly from their wallets and will facilitate real-time conversion of crypto-to-fiat at the point of sale.
Lending protocol Aave experienced a new all-time high in volume. This surge in interest likely emerged from a stream of upgrades that Aave announced including their V4, the launch on ZKsync, and proposing to integrate the GHO stability module with BlackRock’s BUIDL. Furthermore, restaking protocol Symbiotic has launched their devnet to provide developers with a sandbox environment to test new Dapps with the aim to accelerate innovation. Web3 also faced some setbacks, including another hack of the Ronin bridge, this time due to a faulty upgrade deployment script. This reduced the validator vote threshold to zero, allowing a single user to withdraw without a signature. Over $10 million was stolen, but most of the funds were returned by incentivizing the hacker with a $500.000 bug bounty. Also, a previously patched vulnerability in the IBC protocol resurfaced on the Terra blockchain, which led to unauthorized minting of tokens worth millions. This issue has also been contained with an emergency upgrade.
MakerDAO has rebranded to "Sky Protocol" as part of its long-term plan which aims to improve its governance structure and scalability. The rebrand reflects a shift towards a more resilient and decentralized ecosystem, with new features like the USDS stablecoin, the SKY governance token, and the "Sky Stars" sub-DAOs which will operate independently, but still be interconnected with the main protocol. Another reason for this transformation is to make the platform more approachable and regulatory compliant, allowing for greater innovation and risk management within the DeFi ecosystem.
Portfolio company Gyroscope launched a new yield-bearing stablecoin called "Savings GYD" (sGYD), offering an annual yield of 12%-15% to its holders by utilizing DeFi investment strategies and liquidity pools. Moreover, our participation in the $6.4 million fundraising round of research firm Chainbound, which is developing a transaction preconfirmation protocol that will allow block builders of the Ethereum network to provide confirmation of transaction inclusion prior to the timing of the block, essentially opening up the design space to make the trading of future blockspace possible. Furthermore, TLX Protocol has facilitated an impressive increase in activity on their platform. The TVL rose to $1.33 million, and most impressively, they generated $500.000 in total fees. Renzo integrated with Jito to launch $ezSOL, a liquid restaking token on Solana which combines staking and restaking rewards with Jito's MEV-enhanced validator network for optimized yields. Lastly, two of our team members Pim Swart and Bram van Roelen have joined Eclipse as mentors to the inaugural hackathon for the ecosystem. The testnet of Eclipse is live and has proven to be a massive upcoming rollup. Currently Eclipse accounts for 90% of all blobs posted to Celestia, adding up to 376 TIA in fees paid to the underlying DA layer.
