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Daily: DeFi Market, Ethereum Classic Hardfork, Stellar Token Burn
November 05  |  4 min read

Daily: Gunpowder Plot

BeQuant Analytics, a daily cryptocurrency market analysis contributor

In the spirit of Guy Fawkes…

Remember, remember the fifth of November,
Gunpowder treason and plot.
We see no reason,
Why gunpowder treason
Should ever be forgot!

Guy Fawkes, immortalized in this nursery rhyme, seems particularly fitting given the focus on Tether, the NYAG investigation, as well as the academic paper which claims that a single whale was responsible for Bitcoin’s historic price surge. On the subject of the NYAG investigation, the deadline for Ifinex to submit the perfected appeal has now passed, no one knows where it’ll be available, or even if it’ll be available before court resumes in January. Only time will tell whether Tether will suffer the same fate as Guy Fawkes.

The market traded higher on Monday, albeit modestly so, and well within the recent range. Despite the recent, rather lackluster performance in the secondary market, the Decentralised Finance (DeFi) market place remains in good shape. In fact, the amount of ETH locked in the credit ecosystem sits at its highest level yet. The MakerDAO ecosystem alone accounts for 1.57% of the entire ETH supply. What's more interesting is that even though the spot market has been somewhat soft, with Ethereum in mid-180s, the leveraged side is bid, which has extended the contango delta even as the reference rates for USDC have fallen off highs printed earlier in the year.

In terms of news flow, a single market whale on the cryptocurrency exchange Bitfinex likely manipulated Bitcoin’s historic surge of over 2,000% in 2017, according to two U.S. academics. John Griffin, a professor at the University of Texas and Amin Shams, an assistant professor at the Ohio State University, have jointly updated a paper they first published in 2018, saying that one entity on Bitfinex moved bitcoin's prices in 2017. Griffin and Shams did not name the entity.

Consider this, Tether related transactions on the Ethereum blockchain are the largest contributor to gas usage. Now, Ethereum Classic’s transaction fees are cheaper relative to Ethereum, and there is much more spare capacity, in terms of the network. Given the upcoming hard fork and the focus on interoperability, who’s to say that Tether won’t one day move to Ethereum Classic’s chain. At the same time, the hard fork presents yet another opportunity for relative value plays to capture spread tightening vs Ethereum and for contrarians to bet that some miners will switch away from ETH, given the planned transition to Proof of Stake. The upcoming hard fork of the Ethereum Classic network, Agharta, is scheduled to take place on 15 January 2020. The hard fork is said to host aspects of the Constantinople protocol of Ethereum, making it entirely compatible with Ethereum. Features that aren’t a part of Constantinople wouldn’t be a part of the hard fork. However, these features could be part of upgrades in the future.

Finally, the Stellar Development Foundation (SDF) announced a new mandate for its network’s development, stating that it has burned over 55 billion Stellar Lumens (XLM) tokens, which as a result saw XLM rally around 20%. The SDF development foundation drastically reduced the number of tokens in existence as part of an effort to become more efficient as it moves forward. Of the over 85 billion tokens that were earmarked for SDF operations, giveaway programs, and partnership programs, the SDF burned over 55 billion. At the current price of $0.085 per token, the value of the burned tokens is nearly $4.7 billion.

Thank you for reading,

The BeQuant’s Analytics team