In traditional markets, there has always been a degree of disdain levelled towards dividends in tech companies because the introduction of dividend suggests that companies don’t have anywhere else better to invest their money. In addition to that, it raises questions about the growth trajectory of a company. A good example of how the market reacts to such announcements can be seen in Microsoft’s share price performance, when the stock took a hit of over 10% from mid-Jan 2003 to mid-March 2003 after it declared its first dividend payment.
In the fast-growing digital asset market, there are no dividend payments (at least not per se), but there is an opportunity to capture yield through DeFi and CeFi applications - largely courtesy of Ethereum. At last check, the total value (USD) locked in DeFi has crossed back above $550mln, with Maker dominance now at 54.52%. As a guide, the record high stands just under $700mln which was printed in the closing stages of June. dYdX continues to post solid growth, with just under $25mln locked in. The platform accounted for 34% of total loans originated over the course of last month, with Compound v2 at 35% and Maker at 30%. dYdX is a non-custodial trading platform on Ethereum geared toward experienced traders. The dYdX platform lets users lend, borrow or margin trade any supported asset (as of May 2019: ETH, Dai, and USDC, with more planned). The loans data also shows a continued rise in Ethereum borrowing rates, now at 1.8% (new 1-month high), while 1-month data shows that DAI accounted for 70% of loans, ETH 18% and USDC only 11%.
In other news, Hedera Hashgraph has launched its long-awaited public network, backed by some of the world’s largest corporations and promising faster transactions and greater capacity to scale than any blockchain to date. Its creators claim it works more efficiently than blockchains, making it more suitable for enterprises and commerce. Specifically, Hedera says the network can support up to 10,000 transactions per second, compared to 2.8 per second for bitcoin and 15 for ethereum, the two largest blockchains. The first tokens – more than 379 million – will go to investors who participated in a $124 million crowd sale that took place in three rounds from March 2018 to August 2018. Another 1.95 million tokens will go to advisors, vendors and other participants on day one. The balance of the 50 billion supply of HBARs is to be released over the next 15 years by the network’s governing council.
Elsewhere, an economist at the Bank for International Settlements (BIS) has proposed new ways of supervising financial risks through distributed ledger technology (DLT). In a recently released working paper, economist Raphael Auer made the case for so-called embedded supervision, which would automatically monitor tokenized markets. This would purportedly eliminate the need for the collection, verification and delivery of company-related data. Per the report, DLT and smart contracts can facilitate the development of financial markets through new forms of transparency and data credibility, and eventually exclude middleman-based data verification.
Thank you for reading,
The BeQuant’s Analytics team