4th April 2024 > > Cathie, tokenisation, & an algo stablecoin.

tl;dr

All hail Cathie. Tokenisation doubled (or is it squared?) is an exciting new innovation. And a long-term word of warning worth keeping in the back of your mind.

Market Snap

Market Wrap

The halving Is racing into view, now just sixteen days away. Ignore the hype – it will likely be a non-event except for perhaps causing some difficulties for the high-cost miners. Alternatively, if too many people buy into a belief that a rally will be caused by the halving alone, it could become a sell the news event.

Occasional Series – Scottish Police

A spokesperson (whose gender assigned at birth is none of our business) has confirmed that there have been more complaints lodged this week by the public against Humza Yousaf, First Minister of Scotland, than against J.K. Rowling, who probably needs no introduction. The combined total is in the thousands This just happens to be far less than the number of crimes that the Scottish Police do not even bother investigating, but will likely aggravate the more pressing problem.

I make this observation in the context, if it needs explaining, that the police in Scotland are now inundated with disingenuous complaints from anyone with an axe to grind, following the SNP’s legislative attack on free speech enacted last Monday. It is a poetic expression of the dourness of the SNP’s outlook on life that they failed to notice the date when these flagship “reforms” came to life.

Truly, all revolutions devour their own children.

Curious Cryptos’ Commentary – Cathie Wood, CEO of Ark Invest

The CCC loves a bit of Cathie Wood action. She is very clear in her reasoning for her support of BTC:

“A hedge against devaluation, a hedge against a loss of purchasing power and wealth.”

Which raises an interesting point.

With interest rates about to tumble in the UK and the EU (to be followed by the US but with a lag) DXY is only headed north, against which BTC is negatively correlated. We all look at the headline price in USD for BTC, but if your home currency is GBP or EUR, the price action is different.

As Cathie points out, BTC’s performance against the Naira and the Egyptian pound has been breathtaking, because of deliberate government action to devalue their own currency. Cathie again:

“I think this is an insurance policy against rogue regimes or against just horrible fiscal and monetary policies.”

Horrible fiscal policy? Big tick, massive tick, for the UK.

Horrible monetary policy? We are soon to see an even bigger tick as far as the EU and the UK go.

Curious Cryptos’ Commentary – Decentralised crypto ETF

I am surprised it has taken this long.

CrowdSwap has launched a decentralised crypto ETF called Bull Run dETF:

https://crowdswap.org/defi-etf/

Anyone familiar with DeFi and dApps will find it a trivial task to get involved. But what do you get?

BTC and ETH total 35% of the fund. MATIC, AVAX, LINK, & DOT are 10% each, BNB and FET take up another 15% and finally CGPT and CROWD (of course) make up the remainder. The intention is that the allocations remain constant so there must be portfolio rebalancing on a regular basis. That introduces tracking risk, and additional fees. On the upside, because you are buying an NFT representing your share of the entire pool, none of the rebalancing is an issue from a tax perspective. As a means of diversifying your portfolio this looks an interesting idea.

No doubt you will be able to borrow against your investment in the fund, allowing you to leverage your portfolio, if that is the route down which you wish to go. I wouldn’t, but each to their own.

I guess you could look at this as a tokenisation of already tokenised assets. The possibilities are seemingly endless.

Curious Cryptos’ Commentary – The next Terra fiasco is already brewing

Those dark days of the spring and summer 2022 – punctuated by scandal, theft, scams, and a little soupcon of non-monogamous sexual relationships – still sear our memories with pain and hurt.

Around that time the algorithmic stablecoin UST crashed and burnt in spectacular style, as this is the fate destined for all algorithmic stablecoins. The natural state of markets (which always cause the maximum amount of pain to the maximum number of people, especially those who conflate the popular narrative with pearls of insight and wisdom) guarantees that the collapse of fatally flawed concepts like UST will happen at the most inconvenient time.

…

Ethena Labs, purveyor of dApps, has its own algo stablecoin, USDe.

You know there is something wrong when USDe could be staked a few weeks ago for a 67% APY. Currently at 35% APY, these are not numbers that are sustainable.

There is probably no short-term risk here. We are undoubtedly in the very early phase of a secular bull market. But once that turns in three or more years, if Ethena and USDe are as successful as some claim they will be, best make sure you are not holding that bag with that grenade inside.