Binance's Large Traders Want Independent Banks

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Happy humpday 🐪,

The crypto market rebound continues. DeFi protocols are making a resurgence with Aevo soon launching its token rebrand, Frax finalizing its L2 blockchain, and Redacted Cartel providing the highest staked ETH yield.

It’s always good to see new products being developed.

In Today's Email:

• What Matters: Binance & independent banks 🏦 

• Case Study: Pendle’s success 🪂 

• Governance & Features: Gnosis card 💳️ 

TOGETHER WITH

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WHAT MATTERS

Binance Allows Independent Custodian Use

State of play: Binance now allows large traders to hold their assets on independent banks rather than on the exchange.

The move highlights traders' increased concerns about Binance's security following last year's US fine and FTX collapse.

• Binance now permits major traders to store assets at independent banks like Switzerland's Sygnum Bank and Flow Bank.

• Previously, Binance clients could only use the exchange or Ceffu for custody, though US regulators deemed Ceffu a "mysterious Binance-linked entity."

• Sygnum is in the process of finalizing the design of a product that would allow its largest institutional clients to segregate their custody and trading counterparties

Why it matters: Binance is the world’s most liquid crypto exchange and because of that traders are reluctant to fully cease trading on Binance.

• With this solution, Binance might address the concerns and regain its peak volume.

• Depositing funds with a regulatorily overseen custodian enhances security. Additionally, trading firms are more comfortable to “park” their money in a “Swiss bank.”

For builders and investors: The traditional financial guardrails such as the segregation of accounts and entities that serve different functions of the markets will continue to catch on in crypto.

• We have yet to see exactly how this will play out in DeFi, especially when it’s obvious that certain entities have significant control over multiple DAOs. Only time will tell.

CASE STUDY

Pendle: A Platform for Trading EigenLayer Airdrops?

Credit to Charles and Humble Farmer Army Research for the original research.

State of play: The LRT markets on Pendle have become its largest, allowing users to leverage airdrop opportunities like EigenLayer, which significantly contributed to the positive price trajectory of the $PENDLE token.

• Pendle enables the tokenization and trading of yield by dividing assets into Principal and Yield components.

• Pendle's integration with LRTs allows Principal Token holders to secure yields above 30% p.a by locking in staked ETH yield and potential airdrops.

• The Yield Token offers "leveraged point farming," allowing users to amplify their holdings and benefits from airdrops, betting on the future value of these airdrops surpassing the initial investment.

• The demand for these innovative features, especially in anticipation of substantial EigenLayer airdrops, has driven the popularity of Pendle's LRT markets.

• Pendle, with its yield-locking and leveraged farming features, is poised to retain market dominance by introducing new LRTs and potential AVS airdrops.

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INSIGHTS

Vitalik Buterin Outlines 4 Crypto-AI Overlap Scenarios: 'Expanding Use Cases'

Vitalik Buterin highlights four potential intersections of cryptocurrency and AI, noting their use cases and associated risks in a blog post published Tuesday.

• Buterin emphasized AI's high viability as a protocol actor and its promising but risky potential as a protocol interface.

• He pointed out that developing a unified, decentralized, trusted AI for application reliance is the most challenging crypto-AI integration.

• He emphasized the potential and safety benefits of these applications but urged careful deployment due to risks, especially in critical contexts.

FEATURES & GOVERNANCE UPDATE

Gnosis Card Shipping Begins February 5th

Gnosis Pay announced that Gnosis Cards will start shipping on February 5th. The details on the fees and limits will be shared soon by the team.

Gnosis Card is a Visa card that allows users to spend their funds from self-custodial wallets anywhere the payment method is accepted.

Why it matters: It’s always net positive when we can further blur the lines between the onchain world and day-to-day use cases.

Other notable feature updates:

• Sturdy launches V2.

• Sushi relaunched Sushi Bar.

• Blueberry Protocol goes live.

• UMA protocol launches Oval.

• Swell Network launches rswETH.

• GammaSwap launches DeltaSwap.

• Router Protocol launches Router Nitro.

• Perennial Labs launches ETH power perps.

• Radpie launches Auto-looping on BnB Chain and Arbitrum.

• Mountain Protocol launches native USDM on Polygon POS.

• Synapse launches RFQ bridging on Ethereum, Arbitrum, & Optimism.

QUICK BITES

• Invesco cuts bitcoin ETF fee.

• Worldcoin to launch a new Orb

• German authorities seized 50,000 BTC.

• Jupiter to debut with 1.35B JUP token circulating supply.

• dYdX Foundation requests a $30M budget for three years.

• SEC charges founders of $1.7B HyperFund scheme with fraud.

• Coinbase to charge fees on USDC to USD conversions over $75M.

• Cboe says Global X's spot bitcoin ETF application has been withdrawn.

• Standard Chartered thinks the Ethereum ETF will be approved in May.

• SEC plans to dismiss case against DEBT Box, admitting inaccurate statements were made.

NOTEWORTHY READS & MEME

• Vitalik’s read on the end of my childhood.

• Packy McCormick’s read on framing the future of the internet.

• Nic Carter’s read on setting the record straight on BBG coverage.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.