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Debt for Doge
In today’s edition, Celsius is struggling, Lido’s shining, and Vauld gets a breather.
Welcome to The Daily Moon. TikTok’s former gaming head Jason Fung is launching his own blockchain gaming startup, Meta0. Just a month after quitting the short-video firm, Fung is its competitor. Even as the bigwigs stay away, he is building an interoperable blockchain for gaming.
The market was back in the red, with Bitcoin slipping below $19,500 and Ethereum staying flat. The technology sector selloff caused Nasdaq to return to a weak territory. Back home, Sensex and Nifty ended on a flat note amidst weak global sentiments.
Celsius’ Survival Struggles
Apart from the $142 million, Celsius has paid $67 million of its debt to Aave, Compound, and Maker. But the troubles are far from over. The crypto lender is still hit with significant debt amidst a crypto crash. It owes Maker Protocol an additional $82 million. Withdrawals are still frozen, leaving the fate of 1.7 million users’ investments in the balance.
Celsius also hired bankers to help restructure its finances and avoid bankruptcy. In a classic case of being over-leveraged, Celsius had piled up $8 billion in loans. Currently, it's in the red with losses worth $667.2 million. While Goldman Sachs and Nexo were in line to buy its assets, nothing has come off it yet.
Crypto firm Babel, which also paused withdrawals, is facing a similar fate. It is hiring restructuring specialists to recover from the crisis.
Voyager’s getting back
Another crypto lending player, Voyager, is now reviving slowly. Any withdrawal requests submitted before June 30 are being processed. This comes after it had suspended all activity on July 3.
Despite having $1.3 billion in crypto and cash, Voyager was impacted by exposure to Three Arrows Capital. The hedge fund had failed to pay back Voyager’s loan worth $640 million, inciting a liquidity crunch. But there’s still no word on when full-fledged withdrawals and deposits will resume.
Lido’s Rising Again
With staked Ethereum about to regain its peg, Lido is rising too. Staked Ethereum (stETH), a derivative of Ethereum issued by Lido, is almost mirroring the latter’s prices. Finally. With this, Lido’s native token Lido DAO jumped ~21% between July 4 and 5.
A long respite?
We told you how Lido Finance was being impacted by the stETH wave of redemptions. Now, stETH prices are getting closer to Ethereum prices. Trading at ~$1,075 levels, stETH is only marginally away from a 1:1 with Ethereum.
Will this last?
While there is a recovery, the crypto market is still in the middle of a prolonged winter. A price difference of 3% between stETH and Ethereum means a complete re-peg is still far away. But it seems to be a step in the right direction. Ethereum’s move to PoS could be the final deciding factor in Lido’s future token prices.
HOLDers But Borrowers
Over the past three years, as crypto fever took over social media, new investors in the US who did not have the capital to buy tokens took on debt to get into the market.
A study on crypto loans found that 21% of investors took on high-interest debts. Here, every 1 in 10 investors used personal payday loans worth $500-$1,000 to buy crypto. Interest rates in payday loans go up to 365% annually. Another popular route for buying tokens was credit cards.
But it hasn't been a successful ride, with 60% of these investors making losses. What did they buy? Bitcoin was the choice of the majority, followed by Elon Musk’s favourite Dogecoin, and then Ethereum. It’s almost as if these investors just went with what was popular on social media.
HODL for long?
But these new investors seem to be now leaving. With Bitcoin inching closer to its 11-year lows, only HODLers remain. Daily active addresses have fallen from over 1 million in November to just 870,000 as of the week that ended on July 2.
Speaking of tourists
Singapore is planning to limit retail participation in crypto. It could introduce rules on using leverage and launch fixed caps for crypto investments. All of it to stop the contagion from spilling into mainstream markets.
Nexo Eyes Vauld
That was quick
Vauld has admitted that it is facing financial challenges in the wake of the crypto market downturn. It announced plans to restructure its business. The lending platform is also laying off 30% of its staff to cut costs.
A deal with Nexo will prevent Vauld from collapsing. Nexo has its own interests in pursuing its rival. Buying Vauld will help Nexo expand its base in Asia.
Nexo had tried to acquire Celsius earlier, but that proposal didn’t fructify.
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