🔮Real Helium Partnerships, Ripple Fines A Win?, DEX v. CEX, MEMEntum Shifts

Weekly Update

Following the recent chaotic unwind of the yen-carry trade, the Bank of Japan (BOJ) reversed its previous stance and announced it would delay near-term rate hikes to prevent further market disruptions. This unexpected shift led to a 1.5% drop in the Japanese yen against the US dollar, slowing the rush to unwind carry trades and boosting global risk markets. The BOJ is now expected to maintain its interest rate at 0% to 0.1% as it seeks to support Japan’s economy and stabilize the yen, which is at a 34-year low.

Even after ending its long-standing easy-money policy and executing its first rate hike since 2007, the yen continues to weaken, raising concerns about inflation from rising costs. The BOJ remains focused on eventually achieving positive interest rates, but the key issue is how much and how quickly the carry trade will be unwound.

Alongside equities, digital assets recovered sharply following last weekend's volatile decline, with Bitcoin rising as much as 5.3% to briefly exceed $62,000, extending gains from Thursday and Ethereum climbing as much as 6%. Solana showed further relative strength, closing the week up 7.17%

Encouragingly, stablecoin net supply is increasing, indicating new money entering the crypto market. DeFi demonstrated resilience during last week's selloff, processing significant liquidations without taking on bad debt. Although trading volumes have recovered, borrowing and lending activities are still below peak levels.

Top Stories

Stablecoin Market Experiences Volatility Amid Crypto Crash

The stablecoin market experienced volatility as the cryptocurrency market turned down. Among the top 20 stablecoins, Ondo’s US Dollar Yield Token (USDY) and Blast-native USDB lost their pegs for over an hour, with USDY dropping 4.7% and USDB falling to $0.95 before recovering. Other stablecoins like crvUSD, FDUSD, and USDD briefly depegged by 2.5%-3%, recovering within 20 minutes. The market saw a record stablecoin transfer volume of $107 billion over August 3 and 4, a 60% increase from the previous weekend. The total stablecoin market cap rose to $164.4 billion, up 26% from the start of the year, with Tether’s USDT holding nearly 70% of the market share. USDT was the preferred stablecoin, recording $185 billion in trading volume, supported by Tether’s Q2 audit revealing $5.2 billion in reserves. DeFi platform AAVE processed $400 million in liquidations on August 4, maintaining the GHO stablecoin's peg. Stani Kulechov of Avara highlighted Aave Protocol's resilience during market stress, securing $21 billion in value across multiple markets.

Source: Artemis

Helium Catches Air

Helium has partnered with two major U.S. carriers to test the offloading of mobile traffic. This collaboration, beginning with beta tests on June 18, 2024, marks a significant step toward decentralizing network infrastructure, which has traditionally been controlled by large mobile network operators. By leveraging Helium's decentralized infrastructure, carriers can reduce dependence on traditional cell towers, lower operational costs, expand coverage, and increase network resilience, particularly in underserved areas. Initial tests have shown positive results, with Carrier 1 connecting 185,378 subscribers and transferring 2,675 GB of data, while Carrier 2 connected 122,482 subscribers and transferred 1,686 GB.

Source: X (Formerly Twitter)

MEMEntum Shift

Following last week's market-wide selloff—the largest for Bitcoin (BTC) since the November 2022 FTX collapse—memecoin and layer 1 (L1) sectors have emerged as standout performers in the subsequent relief rally. The GML1 index, representing L1 coins like SOL, SUI, and TON, and the GMMEME index, representing memecoins like WIF and PEPE, have both shown resilience. The GML1 index experienced a 21.3% drawdown at its lowest point, while the GMMEME index saw a 25% decline. In comparison, BTC and ETH recorded drawdowns of 16.6% and 23.9%, respectively. As the selling pressure eased, GML1 rebounded by 15.4% and GMMEME by 14.8% at their peaks on August 8, 2024. Notably, the GMMEME index does not include top-performing memecoins like POPCAT or MEW. Since the selloff subsided on August 5, BTC and ETH gained 14% and 10%, respectively, underscoring the outperformance of L1 and memecoin sectors. The memecoin sector's strong historical performance may have fueled bets on continued success, while L1 gains could be driven by specific coin catalysts, such as SUI's upcoming mysticeti upgrade. However, the sustainability of this outperformance is uncertain, and it's unclear if the relief rally will persist or if prices will revisit last week's lows as market volatility normalizes.

Source: The Block

Ethena Labs Expands to Solana, Adds SOL to USDe Collateral

Ethena Labs is expanding its operations by integrating Solana and adding SOL to its USDe collateral basket to counter declining market capitalization. Facilitated by the LayerZero interoperability protocol, this integration allows Solana users to buy, send, and receive USDe, potentially earning rewards through its staked version, sUSDe. SOL joins Bitcoin, which was added as collateral in April. Ethena believes Solana's position as the third-largest blockchain by Total Value Locked (TVL) will drive adoption of USDe and sUSDe. Ethena's move follows a 14% drop in USDe's market cap to $3.1 billion and a 50% decline in its native token ENA's market cap. The startup's USDe stablecoin is primarily backed by staked Ethereum, with its peg defended through hedging with short ETH positions. While the model offers high yields, it also evokes caution reminiscent of past stablecoin failures like LUNA.

Ronin Network Pauses Bridge Following White Hat Intervention to Prevent MEV Exploit

Ronin, the blockchain network associated with the play-to-earn game Axie Infinity, temporarily paused its bridge on Tuesday after detecting $11.8 million in outflows to MEV bots. This pause occurred following the withdrawal of approximately 3,996 ETH ($9.8 million) and 2 million USDC, which is the maximum amount allowable per transaction. Speculation arose that a white hat hacker, acting ethically, might have been involved, which was confirmed later. Co-founder Aleksander Larsen stated the bridge, safeguarding over $850 million, was paused for an investigation into a potential MEV exploit reported by white hats. An error was introduced during a bridge upgrade, causing the system to misinterpret withdrawal thresholds. Ronin Network is now working on a solution, promising intensive audits on the upcoming upgrade. The Ronin team has committed to rewarding the white hats with $500,000. This incident follows a significant hack in March 2022, where the network lost over $600 million in a major DeFi exploit. See similar: Solana developers address critical vulnerability with coordinated patch

Source: The Block

Regulation

Ripple Fined $125 Million in SEC Litigation Over XRP Sales

Crypto payments firm Ripple has been fined $125 million as part of its long-standing legal battle with the U.S. Securities and Exchange Commission (SEC), as per a recent court filing. The SEC initially accused Ripple in 2020 of illegally raising $1.3 billion through the sale of XRP, claiming it was an unregistered security. Judge Analisa Torres ruled partially in favor of the SEC, imposing a civil penalty on Ripple and prohibiting further securities law violations. In July 2023, Judge Torres determined that Ripple's programmatic sales of XRP did not breach securities laws due to a blind bid process, while direct sales to institutional investors were considered unregistered securities sales. Ripple's penalty is notably less than the SEC's proposed $2 billion fine, with Ripple initially advocating for a $10 million penalty. Ripple CEO Brad Garlinghouse noted the court's significant reduction of the SEC's demand, stating it recognized the agency's overreach. Meanwhile, an SEC spokesperson emphasized the court's acknowledgment of the seriousness of Ripple's violations.

IRS Updates Crypto Tax Form, Eases Reporting Requirements

The IRS has released a revised draft of Form 1099-DA aimed at simplifying the tax filing process for crypto investors. The updated form, unveiled on Friday, removes several contentious fields, including requests for crypto wallet addresses and transaction IDs, which many considered intrusive. This change aims to provide more privacy for digital asset holders. Additionally, crypto brokers are no longer required to specify their type of brokerage. The IRS's focus on centralized exchanges like Coinbase and Kraken overlooks the DeFi sector, potentially hindering innovation. Public feedback on the draft 1099-DA is open for 30 days, with its final version expected to be used for the 2025 tax year.

Decentralized Exchanges Gain Market Share Over Centralized Counterparts

Decentralized exchanges (DEXs) have increased their market share against centralized exchanges (CEXs) over the past six months. In January, DEX trading volume was $133.5 billion, accounting for 4.6% of total trading volume. By July, DEX volume rose to $179.5 billion, capturing over 7% of the market—an increase of 52%. This growth is driven by the rise of long-tail assets and liquid staking. DEXs offer low barriers for launching meme coins and other niche assets, attracting projects that later transition to CEXs, which have higher credibility and listing fees. Liquid restaking tokens (LRTs), which grew by 8,300% in Total Value Locked (TVL) from $164 million to $13.8 billion in 2024, also favor DEXs due to better on-chain transparency. While DEXs are gaining ground, they are unlikely to surpass CEXs soon. However, CEXs like Coinbase and Binance have launched their own DEXs, indicating a trend where CEXs might increasingly adopt decentralized elements to complement their core operations.

Brazil Approves First Solana-Based ETF Amid Global Interest

Brazil's Securities and Exchange Commission (CVM) has approved a spot Solana exchange-traded fund (ETF), marking the first such product in Brazil and one of the earliest globally. The ETF, currently in a "pre-operational stage," awaits further approval from Brazil's B3 stock exchange. Once operational, it will track the CME CF Solana Dollar Reference Rate, with QR Asset as the issuer and Vortx managing the fund. Meanwhile, the U.S. has yet to approve a Solana ETF, despite VanEck and 21Shares applying for one. Analysts view the U.S. approval as unlikely before 2025 due to SEC criteria on decentralization and securities classification. Solana's chance of approval in 2024 is estimated at just 9% by prediction market Polymarket. In Canada, 3iQ plans to introduce a Solana exchange-traded product (ETP) on the Toronto Stock Exchange, pending approval, using a closed-end fund design. This contrasts with the U.S. VanEck Solana Trust, which would adjust shares based on market demand. The first Solana ETP was launched by 21Shares on the SIX Swiss Exchange in June 2021.

Other Domestic Regulation Updates

• Harris takes lead over Trump on Polymarket’s $572 million prediction market for next US president
• SEC urges court to reject Coinbase's subpoena request for more documents
• Ethereum ETFs Took in More ETH Yesterday Than on Their Debut—But Not More Cash
• Nasdaq Asks SEC to Approve Options Trading for BlackRock's New Ethereum Trust
• Franklin Templeton Expands On-Chain Treasuries Fund To Arbitrum
• Stablecoin Market Growth Soars as Crypto Enters the Mainstream
• Staking Platform Kiln Launches Platform to Simplify Stablecoin Rewards
  

Other International Regulation Updates

• IMF Says It’s Willing to Overlook Bitcoin Risk in El Salvador Agreement
• Bitcoin Price Crosses $60,000 As ETFs Attract Substantial Inflows
• South Korea to Levy Supervisory Fees on Regulated Exchanges
• French Regulator Begins Accepting Service Provider Applications Ahead of MiCA

Pain & Gain

Pain

• Hackers Capitalize on Crypto Market Crash To Buy ‘Discounted’ Ethereum
• Here’s an ELI5 on How Japan Sent Global Markets Tumbling
• Investors Sell BlackRock’s BUIDL Fund After a Volatile Weekend

Gain

• Institutions Are 'Buying the Dip' as Crypto Finds a Footing Following Recent Market Slump
• Donald J Trump Memecoin Rugpulls