Galaxy AUM Tripled to $5B

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Happy Humpday 🐪. Even though the holiday season is coming up, the degeneracy continues. BTC and ETH looking like they’re about to make a bull flag pattern while Solana is back above $77. Let’s end the year with a bang!

In Today's Email:

• What Matters: Galaxy’s AUM Tripled 🌌

• Case Study: Trade ETH staking rate 📊

• Governance & Features: EigenLayer deposits Surpass $900M 📈 

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WHAT MATTERS

Galaxy’s AUM Tripled from $1.7B to $5B

State of play: Galaxy was selected to sell, hedge, and stake FTX’s bitcoin, ether, and GBTC in August. This helped Galaxy triple its AUM from $1.7B a year ago to $5.3B.

• Mike Novogratz’s Galaxy Digital seeks further sales from bankrupt crypto firms after a deal with FTX tripled its AUM.

• Galaxy faced a $94M loss in Q3’23 and has been struggling to rebound from last year's crypto market crash.

• Galaxy is interested in acquiring assets from FTX's extensive venture capital portfolio, including its nearly $5B-valued stake in Anthropic.

The firm also plans to switch its listing from Toronto to Nasdaq and recently partnered with Flow Traders and DWS to launch a euro-denominated stablecoin.

Why it matters: Andrew Bond from Rosenblatt Securities noted that Galaxy's FTX mandate is significant for Galaxy, potentially leading to more mandates that will potentially bring more profit for the company.

For builders and investors: Understanding how bankruptcy assets will be handled is critical in understanding how market sentiment will shift and where pockets of liquidity lies for builders to try and win new users.

CASE STUDY

IPOR’s ETH Stake Swap

State of play: IPOR’s Stake Rate Swap (SRS) is live. The IPOR Protocol’s first SRS product enables hedging, speculation, and arbitrage on Lido’s $stETH risk-free rate with up to 500x leverage.

@DeFi_Made_Here shared how to capitalize this when degens are aping in:

• The SRS differs from normal perp futures in that it involves exchanging PnL on a per-block basis in the blockchain, rather than the typical futures contract structure.

• Using IPOR's SRS, users can go long on interest rates during volatile periods. With just 1 $ETH as collateral, users can trade a notional volume of up to 500 ETH, offering high capital efficiency in the market.

• Interest Rate Swaps (IRS) in TradFi, unlike perps, are not just for speculation. They are crucial for hedging and managing portfolio risk, which is why they have high volumes in traditional finance markets.

What’s next: Unique types of derivatives that are already available in the TradFi markets will continue to be replicated in DeFi (volatility, interest rate, credit default swaps, and many more).

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INSIGHTS

Coinbase 2024 Crypto Market Outlook

Coinbase released a research titled “2024 Crypto Market Outlook” that presents the key themes expected to prevail in 2024, as well as deep dives into Bitcoin, Ethereum, stablecoins, and more.

Here is the high-level summary of the outlook by @JavierAng_ 

• Crypto in 2023 saw a market recovery, industry resilience, and Bitcoin's establishment as a safe-haven, suggesting positive regulatory shifts ahead.

• 2024's US economic forecast indicates minimal recession risk, with potential growth in risk assets and crypto in Q2. Regulatory updates, including bitcoin ETFs, may increase crypto's institutional appeal.

• Bitcoin's market dominance is expected to persist, boosted by institutional interest and the potential launch of spot bitcoin ETFs.

• The bitcoin halving in April could catalyze a shift towards bitcoin amid macroeconomic changes.

• While de-dollarization discussions may intensify, bitcoin's success isn't dependent on a decline in the USD's reserve currency status.

Crypto Verticals in 2024:

• In 2024, the crypto market will pivot from infra development to dApps.

• Ethereum will lead the 2024 crypto market, while specialized and modular L1s will rise.

• The L2 ecosystem will grow due to new rollup technologies and modularity, with reduced tx fees expected from the Cancun update.

• Tokenization will be advancing, enhancing finance and expanding to various assets, while institutions cautiously adopt private blockchains.

• Web3 gaming is gaining traction and evolving with NFTs, poised for a crucial test of its influence on gaming in 2024.

• DePIN and DeComp will gain traction, revolutionizing resource use, and AI with blockchain.

• Zero-knowledge systems and fully homomorphic encryption are moving from theoretical to experimental stages in crypto.

FEATURES & GOVERNANCE UPDATE

EigenLayer Deposits Surpass $900M

EigenLayer's user deposits have skyrocketed, surpassing $900M (410K ETH). The protocol's recent adjustment of deposit caps for LST has driven a rapid increase in total deposits, marking a nearly 4x rise in just a few days.

• EigenLayer recently increased its re-staking limit from under 120K ETH to 500K ETH (~$1.1B).

• New LSTs including those from Binance, Stader Labs, Origin Protocol, Swell, StakeWise, and Ankr.

• EigenLayer will pause all user deposits once the 500K ETH limit is reached.

Why it matters: The increased caps and the introduction of various Liquid LSTs sparked a surge in activity, as users deposited funds to engage with the network and earn points.

• These points could potentially open the door to receiving Eigen token rewards in the future, though this remains speculative.

Other notable feature updates:

• Lyra launches V2.

• Lyra launches Lyra Chain.

• Boost launches on Blast L2.

• Eclipse launches its testnet.

• Subsea goes live on testnet.

• Hashflow launches on Solana.

• Worldcoin launches World ID 2.0.

• LayerZero launches V2 on testnets.

• Poolshark launches on Arbitrum mainnet.

• Cronos Labs launches Cronos zkEVM testnet.

• Redacted Cartel launches the Pirex ETH (pxETH).

• Clearpool launches Clearpool Prime on OP Mainnet.

• DVT network SSV launches its permissionless mainnet.

• Term Finance launches the STBT (Short Term T-bill Token) auction.

• Pike Finance launches testnet on Ethereum, Optimism, Arbitrum, and Base L2.

QUICK BITES

• Do Kwon appealed his extradition ruling.

• Zcash Founder steps down from CEO role.

• Crypto Super PAC raises $78M for 2024 US election.

• UK publishes regulations for a digital securities sandbox.

• Sen. Warren pushes back at blockchain lobbying efforts.

• DCG can’t sell ownership of Genesis until bankruptcy ends.

• BlackRock & Nasdaq meet with the SEC regarding Bitcoin ETF.

• Federal Judge approves settlement between CFTC and Binance.

NOTEWORTHY READS & MEME

• Variant’s read on the points system in crypto.

• Shoal Research’s read on liquid restaking tokens.

• The Spartan Group’s read on 9 exciting web3 topics in 2024.

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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.