🚀 Elon Musk Spooks ETH Futures Bears
Hello Defiers! Here’s what we’re covering today,
Fears about ETH futures launch on CME fade
Tesla adds $1.5B in BTC to its balance sheet
Hashmasks leverage NFT indexes
Grayscale’s valuing ETH report
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ETH FUTURES ARE HERE
TLDR Ether futures are now available on the Chicago Mercantile Exchange, the world’s largest derivatives exchange by volume, for the first time ever.
Many thought the move would mark the top of the market, in the same way that CME futures marked the top for Bitcoin’s 2017 rally, but those fears have faded for now thanks to Tesla buying $1.5B of BTC, or about 8% of the company’s cash, further fueling the cryptocurrency rally.
PRICE MOVES ETH futures contracts expiring February 2021 are up almost 4% to $1,734 from its the price at open. ETH is up almost 10% to $1,714, and BTC is soaring by 15% to as high as just over $44k.
2017 TOP CME released its BTC futures contracts on Dec. 17, 2017, a day after the cryptocurrency hit its then all-time high of 19K according to CoinGecko. BTC crashed to 6.9K less than two months later.
IT’S DIFFERENT Aside from the push from Elon Musk advocating for Bitcoin, some argue that “this time it’s different.” Kadan Stadelmann CTO of blockchain solutions provider Komodo said that the cryptocurrency industry and Ethereum itself is more developed and mature than it was in 2017.
“When CME Group launched futures trading for Bitcoin in December 2017, the market was much different than it is today,” Stadelmann said. “The implementation of smart contracts technology was basically in its infancy, and much fewer people actually understood blockchain. Today we see how the Ethereum network has since become a global financial powerhouse with Ether at the center of it.”
INSTITUTIONS ARE COMING Money managers are now able to get exposure to Ethereum with less operational overhead, as they can simply use the same infrastructure they’re using to invest in traditional commodities and FX, without worrying about custody or regulation.
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TLDR Hashmasks, the latest craze in the NFT market, aren’t just about looking cool. Now, collectors can use their Hashmasks to provide liquidity on exchanges like Sushiswap.
NFTX is a new protocol that allows users to create and invest in 1:1 NFT-backed index funds. This allows NFT holders to use their digital assets as collateral for AMM liquidity providing, yield farming and borrowing/lending. Hashmasks is leveraging the protocol to create the NFTX Hashmasks Index Fund.
FEE FOR EVERY TRADE Unlike on other NFT marketplaces, like OpenSea, the index fund will allow NFT owners to make a percentage fee on every trade that’s made on the index’s tokens, NFTX explains in their blog post. Supplying one Hashmask as collateral will always give you one $MASK index fund token.
CAVEAT When users want to pull their collateral back out, $MASK tokens can only be redeemed for a random Hashmask from the collateral pool. The fund is banking on being filled up with the least valuable Hashmasks (which they refer to as “floor Hashmasks”), and is set up to specifically track the ETH-floor prices of Hashmasks.
TLDR Digital currency asset manager Grayscale, breaks down three lenses through which to value Ethereum’s cryptocurrency Ether; money, commodity and interest bearing asset, in its first Ethereum-specific report.
ETH AS MONEY In the report titled “Valuing Ethereum” Grayscale cites the digital asset’s necessity as payment for transactions like smart contract deployment and trade execution as akin to money.
ETH AS COMMODITY Grayscale also frames Ether as a consumable commodity. The necessity to use the cryptocurrency in order to change the blockchain’s state demonstrates the choice to use the word “gas” to denominate transaction fees was not a mistake. A person must pay to use the network.
ETH AS INTEREST BEARING ASSET Grayscale also views Ether as an interest bearing asset, pointing to the cryptocurrency’s use in the much-anticipated Ethereum 2.0 upgrade, which allows users to stake the digital asset to secure the network in exchange for an ETH-based reward.
Tesla Inc.’s announcement that it invested $1.5 billion in Bitcoin has made the electric automaker the second largest publicly-traded corporate holder of the digital currency, according to data from bitcointreasuries.org.
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🧑💻 ✍️ Stories in this newsletter were written by Daniel Kahan and Owen Fernau, and edited by Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila and edited by Alp.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($10/mo, $100/yr).