Here are this week’s top headlines in crypto news:
- Serial outages on Solana: cryptocurrency’s fastest blockchain goes down for what must be the dozenth time since its launch, causing SOL’s price to slide. Does Solana still have potential?
- The Shiba Inu founder is out. Ryoshi scrubs his social media after bidding farewell to the Shiba Inu community with no explanation. What’s next for the Dogecoin killer?
- Optimism Airdrop: Ethereum’s second largest layer 2 scaling solution airdrops its governance token, foreshadowing similar moves by competitors. Which layer 2 will be next to do an airdrop?
- Crypto hiring and crypto firing. Crypto exchanges are laying off employees while asset managers are creating new crypto opportunities. What does it all mean for the crypto market?
- Fiat versus cryptocurrency: Argentinians and Turks turn to cryptocurrency in the face of exponential inflation. Could we see the same happen elsewhere?
- The central banks, CBDCS, cryptocurrencies. The central banks of Brazil and India reveal their CBDC plans while the Bank of England talks stable coins. Everything you need to know.
- A closer look at last week’s top performing cryptos and where they could be headed next.
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Serial Outages On Solana
Last week, the Solana blockchain experienced yet another outage. It lasted four hours and it was reportedly caused by a bug related to cold storage, aka offline transactions. Given all of Solana’s other recent outages and the general decline of the crypto market, the most recent outage caused many soul holders to sell, resulting in a 10% decline for Seoul shortly afterwards. As someone who holds soul as part of their personal portfolio, I can’t deny that watching all these outages hasn’t been pretty. I’ve pointed them out as being a problem in our Solana updates.
This begs the question of why soul holders like me continue to huddle despite the constant breakage of the Solana blockchain, especially since there are comparable alternatives like the NEAR protocol that don’t experience outages. I obviously can’t speak for others, but in my case, my conviction mainly comes from the massive amount of money that has been poured into the project by institutional investors.
The fact that crypto projects building on Solana continue to see serious funding and that popular crypto projects continue to integrate with the Solana blockchain plays a big factor as well. Logically, this then begs the question of why institutions continue to invest so heavily in Solana’s ecosystem, and the answer was actually revealed at Algorand’s decipher conference last November. On the growing Algorand ecosystem panel, crypto VCs revealed that institutions don’t care about Solana’s outages; they know the technology and the team are solid, and that’s enough for them.
In other words, institutional investors are confident that these constant outages will eventually be resolved. This attitude, combined with the allocation to back it, speaks volumes about Solana’s potential. Now don’t get me wrong, this doesn’t mean that Solana couldn’t succumb to its competition. As I mentioned, Solana has very similar competitors that are similarly well capitalized. That’s why it’s always best not to put all your eggs in one basket and to also have a longer-term vision of a crypto project regardless of its current issues. It’s what the institutions are doing after all.
Shiba Inu Founder Is Out
On the topic of crypto projects currently experiencing issues, last week Shiba Inu’s pseudonymous founder Ryoshi scrubbed his social media, leaving only two medium posts announcing his departure. The announcement seems to have taken the Shiba Inu community by surprise, despite the fact that Ryoshi has repeatedly emphasized that he was not an important part of the project. Ryoshi stepped away from the project not long after it was founded and it has basically been community driven since that time.This is probably why the SHIB token didn’t really react to the news, though it was still significant enough that high-profile members of the Shiba Inu community came out to defend it against the fud it inspired.
Still, there’s no denying that the timing of Rayoshi’s departure wasn’t exactly ideal. SHIB is down close to 90% from its all-time high. Crypto has entered a bear market. What’s even more peculiar is that Ryoshi hasn’t deleted his social media accounts even though he’s deleted just about every post he’s publicly made. This suggests he could be planning on making a surprise appearance at some point in the future, but if this is the case, then why go through the trouble of deleting everything that’s been said in the past?
It seems nobody has the answer. It doesn’t help that Ryoshi’s real identity is still unknown. Some of you may know that a picture from his first blog post suggests he has serious connections in the Ethereum community, which makes his apparent departure that much more significant. For what it’s worth, Shiba Inu’s development continues and though I haven’t been keeping a close eye on the project, I know that many important milestones have been met on the metaverse side. The real question is whether Shiba Inu will be able to achieve its end game of becoming the Dogecoin killer, especially since Tesla CEO Elon Musk continues to tease doge payments for his other companies.
Another popular crypto project that made the headlines last week was Optimism, Ethereum’s second largest layer-to-scale solution by total value locked.
At first, Optimism made the news because of the airdrop of its highly anticipated governance token with the ticker OP, an airdrop that had been revealed back in April. The OP token airdrop was scheduled for May the 31st and with over 250 000 wallet addresses eligible to claim it went just about as well as you might expect given the circumstances.
First, it was found that a few users had managed to claim OP tokens in advance by interacting directly with the smart contract for the token before a front end had even been built. When the airdrop officially began, Optimism almost broke because of all the demand with the team reportedly scrambling to increase the protocol’s throughput while users clamored to claim OP. After OP began to list on centralized exchanges, its price predictably crashed. This resulted in the governance proposal to ban the quote mercenary actors who immediately sold their tokens from participating in future airdrops.
As you might expect, this proposal was extremely controversial, with crypto influencers and OG Cobie stepping in to highlight how ridiculous it is to consider banning sellers with their own satirical proposal, which was subsequently removed from the Optimism governance forum.
Other members of the optimism community also weighed in on the controversial proposal by pointing out that any attempt at clamping down on these would-be sellers will only result in them moving their capital to competing layer 2’s for Ethereum, notably Arbitrum, which uses the same scaling technology.
On that note, Arbitrum could potentially be the next Ethereum layer two to announce a token of its own, and that’s because it has secured more than 120 million dollars from various crypto VCs since it began. For reference, I reckon these crypto VCs want a return on their investment. The optimism also raised around 180 million dollars from various crypto VCs and, to my surprise, a token eventually came along.
There’s also the question of competition. The optimism airdropping its own token is likely tempting Arbitrum to respond in kind, especially since the presence of the OP token arguably makes optimism more competitive.
There’s precedent for this too. When Sushiswap airdropped the sushi token during DeFi summer, UniSwap really had no choice but to follow suit if it wanted to remain competitive. About a month later, the university token was live. Assuming Arbitrum will be issuing a token of its own in response to Optimism, this means now is the time to interact with its layer 2 so that you become eligible for the snapshot. If an arbitrary token is announced, it’s likely that it could see the same sort of price action as the OP token once it’s listed on centralized exchanges, so keep that in mind before you ape in.
Crypto Hiring & Crypto Firing
Anyway, coins and tokens aren’t the only things crashing in cryptocurrency these days. Crypto companies have taken a hard hit as well, especially those that had lots of exposure to terror companies. This includes cryptocurrency exchanges who, besides holding Luna and UST in their own wallets, have seen a substantial decline in revenue because there simply isn’t all that much crypto trading going on.
It seems that many crypto exchanges increased their expenses to unsustainable levels during the crypto bull run. Coinbase and Gemini are just two titans that will be cutting their workforces by ten percent. Coinbase has really taken the spotlight in this regard, and that’s because it has gone as far as telling newly hired employees that they’ll be losing their jobs before they even get to start them.
Meanwhile, crypto exchanges like FTX and Binance seem to have been better with their money management, with the former managing to become the second largest exchange by trading volume in May and the latter announcing a $500 million development fund. As such, it could be said that money isn’t necessarily leaving the crypto industry per se. All that’s happening is that capital is being allocated in different ways and in different places by different entities.
A good example is Fidelity, which recently announced that its digital assets division will more than double its workforce to over 110 employees. For context, Fidelity is one of the largest asset managers in the world, and the fact that it’s effectively doubling the size of its crypto arm should be a wake-up call to the coiners.
Another great example is blockchain analytics company ChainAlysis, which is reportedly offering triple pay to British police officers with digital asset experience. This is one of the many reasons why I believe central bank digital currencies will never get off the ground. Why work on a dystopian technology for a six-figure salary when you can work on technologies that promote financial freedom for three times the pay? In case anyone is wondering, crypto jobs can and often do pay twice as much as their non-coin equivalents, and though many crypto companies are cutting back on hiring, there are still thousands, if not tens of thousands, of crypto job openings.
Fiat vs. Cryptocurrency
It’s a chart of the US dollar versus Bitcoin:
As you can see, the USD has gone completely flat. It looks worthless compared to Bitcoin now. Aside from the bullish case this makes for Bitcoin, it also underscores the fact that much of the price appreciation. We’re seeing among assets of all kinds is coming from the gradual devaluation of fiat currencies through money printing.
For a long time, people didn’t pay attention or even notice that their purchasing power was being taken away from them, but the perfect combination of macro factors has converged to make inflation the number one issue in just about every country in the world.
High inflation is one of the predicators of bitcoin adoption at the national level of the larger countries. Turkey and Argentina have the highest levels of inflation, and this has been the case for quite some time. It should therefore come as no surprise then that crypto adoption has been extremely high in both countries, so much so that both of these countries have taken measures to prevent the adoption of cryptocurrency. Turkey’s tactic was to ban crypto payments, whereas Argentina recently signed a deal with the devil, aka the IMF, to prevent the adoption of crypto in the country in exchange for more US dollars. The ironic thing there is that the US dollars being given to the Argentinian government are quickly losing value too as inflation in the United States approaches double digits.
The only reason why Argentina is accepting these terms is because the US dollar is more stable relative to other fiat currencies. This is what many critics of Bitcoin’s inflation hedge narrative failed to factor in. Yes, bitcoin is volatile, but relative to the readily available alternatives for the average person in many developing countries, it is significantly less volatile. Never mind that bitcoin’s volatility has been declining over time as investors slowly come to a collective agreement about its true value relative to feared.
Bitcoin can also be confiscated, which is an important feature during times of financial stress since governments tend to react by trying to centralize control of the financial system as much as possible to prevent people from ditching their fiat currencies. This actually seems to be one of the primary motivations for creating a central bank digital currency.
Central Banks, CBDCs, Cryptocurrencies
Speaking of central banks, the central bank of Brazil recently revealed its vision for the digital real, Brazil’s upcoming central bank digital currency, in a research paper for the bank for international settlements, the so-called bank for central banks. Consistent with the CBS plans, a digital real would give the Brazilian central bank total control over the population’s purchases. An economist with the Brazilian central bank specified that it would make it impossible for people to cash out under certain economic circumstances and that the digital real would be programmed to ‘make room for new business models that are better suited to meet the population’s demand’.
Naturally, the Brazilian central bank will be careful not to step too much on the toes of commercial banks lest it lose control of the financial infrastructure it needs to leverage to roll out its dystopian digital currency. Funnily enough, Brazil has the fourth highest inflation rate of any large country after Turkey, Argentina, and Russia, and it consequently has one of the highest rates of crypto adoption in the world.
Although Brazil’s central bank didn’t say it is rolling out a CBDC to combat the adoption of cryptocurrency, its paper seems to suggest that custodians of digital currencies would be obligated by law to convert those digital currencies into digital real at the request of the central bank. This means that if you keep your bitcoin on a cryptocurrency exchange or bank in Brazil, the Brazilian central bank will have the power to compel that exchange or bank to convert your bitcoin into digital real, whether you like it or not. That’s why you must always keep your crypto in your personal crypto wallet.
Top Performing Cryptos
Anyhow, across the pond, an official for India’s central bank straight up said that its upcoming digital rupee could be used to kill crypto in the country. This is almost exactly what the central bank of Indonesia said late last year. It’s an idea that’s apparently becoming popular with central bankers around the world.
Here in the UK, the Bank of England is issuing a recommendation to crack down on stable coins that could become too big. This is eerily similar to the stable coin regulations currently being proposed in the European Union, and it’s a sign that foreign central banks are aware that dollar-backed stable coins are de facto digital dollars that could undermine their own fiat currencies.
Whether central banks can successfully stop the adoption of cryptocurrency through regulation remains to be seen, though this is much easier to do in developed countries. It will become harder to deter people from protecting their purchasing power as inflation continues.
Turning to the charts, we can see that Bitcoin finally had a green candle on the weekly, though this is only thanks to the wick caused by the sudden rally that was cut short by macro factors like the war in Ukraine and jobs data in the United States.
Bitcoin continues to hold strong at around $29k and there are conflicting opinions as to whether this is a good or bad thing. Some say that lingering around this support level makes it stronger, whereas others contend this constitutes a constant test of this support, which could lead to a break to the downside. We’re likely to see another year or two of price declines, as this is consistent with the length of previous crypto bear markets. So it wouldn’t surprise me if BTC headed lower from here as the weeks go on.
In any case, last week’s top performing cryptos were Waves, Helium, Cardano, Stellar, and The Graph – an interesting combination to say the least. Starting with Waves, WAVES coin seems to be pumping on the news that the waves team and community are working to rebuild its DeFi ecosystem after the temporary loss of its own USDN decentralized stablecoin, which let’s just say is similar to UST. Unfortunately for Waves, its massive rally is barely visible on its long-term price chart, and that’s all because of the massive speculative pump that occurred earlier this year as a result of the USD stablecoin. Luckily, the Waves weren’t completely taken out when we depegged.
Next, we have Helium, whose HNT coin seems to be rallying in anticipation of the announcements the project is expected to make at CoinDesk’s consensus conference later this week. As an HNT holder, I can tell you that it hasn’t been fun watching its price collapse over the last few months, and it’s a shame that its recent pump barely registers on the richter scale. Even though peer-to-peer internet is no laughing matter, I continue to believe in the project’s long-term potential.
It’s a similar story with Cardano, whose ADA coin has been collapsing over the last few months and is a far cry from its all-time high. The small recovery it’s seen recently has its roots in the upcoming vassal hard-fought combinator event, which will improve Cardano’s scalability. While this will have huge implications for ADA in the future, the fact that we’re in a bear market could make this a sell the news event in the short term. So just keep that in mind, if that’s your time horizon. All I’ll say is it’s certainly not mine.
Then there’s Stellar, whose XLM coin is experiencing some positive price action in anticipation of Stellar’s own appearance at CoinDesk’s consensus conference later this week. You know, I might just have to do a video covering the highlights if they prove to be important. It’s too bad that XLM isn’t exactly shooting for the stars, but the silver lining is that it seems to be getting some organic demand from all the integrations and partnerships the seller has secured, most notably with MoneyGram for remittance payments.
Finally, we have The Graph, whose GRT token is taking a trip up north on the news that its data indexing protocol will become fully decentralized by early next year. This is certainly good news. The bad news is that GRT’s price chart is one of the most painful, and that might have something to do with the fact that GRT’s circulating supply has increased by almost 4x over the last year or so. Clearly, there wasn’t enough demand to make up for all this cell pressure.
[This article is a transcription of a video made by Coin Bureau]
Original video: https://youtu.be/C4SN2eSd4SA ]