"Celsius, which resembles a bank while touting itself as a democratized interest income and lending platform, is rumored to be insolvent following a freeze on withdrawals over the weekend. Founded in 2018, Celsius had more than $8 billion lent out to clients and $12 billion in assets under management by May of this year, according to the company."
The entire crypto space has been a Jenga stack of interconnected time bombs for months now, as the companies find new ways to prop each other up. Headlines talked about millions, billions, trillions of dollars in crypto being made or lost - but that's all virtual money that never existed. With a serious shortage of actual dollars, the crypto economy had to keep coming up with more and more elaborate schemes to try to extract real money from retail investors. Venture capitalists frantically promoted NFTs and Web3, trying to lure in precious dollars. The 2021 bubble brought forth a wave of "investment firms" offering interest rates on the order of 20%. This is just not possible in the present economy. If anyone offers 20%, your first thought should be: "what's wrong here?"
The IMF published a blog post that makes the case for leveraging the technology behind crypto-assets to upgrade payment infrastructures and ensure interoperability, safety, and efficiency in digital finance. It points particularly to tokenization, encryption, and programmability, plus central bank digital currencies (CBDCs) to clear and settle transactions. Payments could be made from one private money to another, through the CBDC ledger or platform. Money could be escrowed on the CBDC platform, then released when certain conditions are met, such as when a tokenized asset is received. And the CBDC platform could offer a basic programming language to ensure smart contracts are trusted and compatible with one another.
The European Commission has released its proposal for the union's new Data Act. Among other things, it would mandate that applications using smart contracts include "internal functions which can reset or instruct the contract to stop or interrupt the operation to avoid future (accidental) executions." Fears are being expressed that such "kill switches" could threaten the promise of immutability because, with the ability of a single source to make a change, the contract is no longer autonomous.
"Even though the rate to borrow Tether is higher than the rate to borrow USD Coin, it may be worthwhile for me to go with the a Tether loan if I think that the odds of Tether failing justify the higher financing cost. We can even go a bit further and say that the 0.9% premium on a Tether loan is the market's best estimate of the odds of Tether losing its peg relative to USD Coin losing its peg. So for all those would-be stablecoin analysts out there, keep your eye on Aave's USD Coin-Tether spread. It's a good indicator of stablecoin risk."
"What exactly is the fork, in layman's terms? How will it affect the price of ETH now and in the future? Which parts of De-Fi it is likely to effect? Will it impact the smooth running of the Lido liquid staking service and/or the Aave lending protocol? What other risks should we be watching for over the next few weeks? "
"Tokenized funds - investment funds in which the fund units are tokenized and represented on distributed ledger technology (DLT)1 - have begun to emerge as digital investors seek ways to invest in asset classes, such as government bonds, that have become more attractive after recent interest rate hikes. Although the funds come with inherent risks and require managers to have technological expertise, the growing adoption of tokenized funds signals untapped market potential." (Moody's)
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