Tether Bans OFAC SDN List (DUH)

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Good Morning. The crypto markets dipped slightly but still remains above $1.6T in total market cap. $300M+ was liquidated in the past 24 hours. Trade carefully, when the market reverses, it will reverse violently.

In Today's Email:

• What Matters: Tether freezes tokens 🔒️ 

• Products: The Metamask for CeFi 🦊 

• Charts: MakerDAO’s revenue, RWA DeFi Protocols' Native Token 📈

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WHAT MATTERS

Tether Freezes Tokens of US-Sanctioned Individuals

State of play: Tether announced that it would be 'freezing' its tokens in wallets belonging to sanctioned individuals on the US OFAC SDN list.

• Tether claimed the action as a proactive measure to prevent potential misuse of Tether tokens.

• Etherscan data reveals Tether froze 161 Ethereum wallets, with 150 of them currently holding no USDT tokens.

• The remaining 11 wallets collectively hold over $3.5M USDT, with the majority, $3.4M, concentrated in just one address.

• ZachXBT links the address to the recent Stake betting platform hack.

• One sanctioned wallet moved over $400K USDT received from THORChain the day before the freeze.

• On-chain data reveals several sanctioned wallets were utilizing Tornado Cash over the past six months, with one of the frozen wallets linked to the $625M Ronin Bridge attack.

• The US Treasury Department attributes the attack to the North Korean hacking group Lazarus Group.

Sanctioned persons on the OFAC SDN List are individuals, entities, or groups identified by the US government as being subject to economic sanctions.

• Sanctions are commonly imposed due to involvement in activities like terrorism, drug trafficking, weapons proliferation, or other threats to US national security and foreign policy.

Dirty Bubble Media examined “Tether’s Secret Loan Portfolio” and estimates that Tether issued billions of USDT backed by crypto collateral.

• Tether lent Celsius Network over $4B.

• Other parties like Amber and 3AC received billions in loans, circulating through the crypto economy without involving the TradFi system or being backed by real money.

• Dirty Bubble Media also suggests that Tether may include “extra” Bitcoin from addresses holding Bitcoin collateral for their secured loans in their reserves.

What’s next: Tether, previously hesitant to freeze wallets linked to the sanctioned protocol Tornado Cash, has now voluntarily blacklisted its contract addresses following recent announcements.

• Tether’s CEO Paolo Ardoino stated that the decision is an expansion of their collaboration with global law enforcement and regulators.

• In October, Tether froze 32 wallets associated with terrorism and warfare in Ukraine and Israel.

• Last month, Tether also froze $225M linked to a human trafficking syndicate following a U.S. Department of Justice investigation.

Our take: It’s frankly surprising that this hasn’t happened. This initiative from Tether shows that the recent Binance-DOJ case has caused many offshore entities to take precaution and comply.

For builders and investors: A Binance-like deal for Tether will most likely happen in the next few years.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

PRODUCTS OF THE WEEK

Cede.store, the Metamask for CeFi

Cede.store is a non-custodial browser extension allowing users to connect to different CEX, enabling them to see CeFi data and liquidity from any dApp in a non-custodial way.

• Cede.store stores users’ API keys directly on their machine and lets users interact with their CEX.

• Users can monitor their CEXs positions, while also using decentralized applications

• Cede allows users to track, trade, and transfer any CeFi and DeFi assets on the same interface.

Other cool products:

• Rudy, a crypto robo advisor.

• Dredid, a decentralized social hub.

• Phorevr, a blockchain-based photo storage.

• Turf, a modular, permissionless eSports platform.

• Envio, a multi-chain EVM blockchain indexing framework.

CHARTS OF THE WEEK

MakerDAO $200M Annualized Revenues

State of play: OurNetwork reported that MakerDAO surpassed $200M of annualized revenues in November.

• T-bills account for 55% of the revenues.

• The bull market made Maker loans relatively less expensive, contributing to 37% of revenues.

• The bull market also increased people's willingness to take crypto-backed loans ($1.3B at the end of 2022 to $2B), which decreased MakerDAO’s stablecoin holdings.

• With decreased stablecoin issuance, the incentives from GUSD and USDP have diminished.

• MakerDAO transformed its balance sheet, reducing stablecoin exposure and allocating up to $2.89B in RWAs, primarily off-chain T-Bills, over the past year.

Our take: Maker was an extremely agile protocol for its size, actively shifting strategies during the bear market — most notably its initiatives with Monetalis to bring T-Bill yield onchain.

RWA Tokens Outperform ETH 3x

Credits to An Ape’s Prologue for the original article.

State of play: In 2023, tokenized assets, especially short-term US Treasury assets, experienced significant growth, with their market cap surging by ~577% to reach an all-time high of $794M.

• In 2023, DeFi protocols facilitated $3.9B in loans, mainly through private credit loans backed by stablecoins.

• The increased demand has benefited RWA DeFi protocols, with their native tokens recording a remarkable 290% return in 2023. This performance surpasses that of ETH by more than threefold.

• MakerDAO has 52% of its $DAI stablecoin backed by RWAs, primarily US Treasury Bills. The yields from these assets are fully passed on-chain to $sDAI holders.

Our take: The consistent increase in on-chain loans supported by RWAs and the expanding market cap of tokenized securities signal a rising demand for RWAs on-chain — which will remain true so long as interest rates are high.

QUICK BITES

• Worldcoin looks to raise funds through WLD sale.

• LayerZero targets token launch for first half of 2024.

• Fidelity held meeting with SEC about spot Bitcoin fund.

• Decrypt and Rug Radio to combine in “merger of equals”.

• El Salvador offers Freedom Visa for $1M crypto investment.

• Starknet Foundation plans to distribute 1.8B tokens as rewards.

• Pudgy Penguins announces 'Pudgy World' Web3 game on zkSync.

• IMX surges as VanEck comments on blockchain-based video games.

• Compound DAO fall short of 15,000 votes to compensate developer.

• Judge grants SEC another week to explain alleged misrepresentations in Utah crypto case.

NOTEWORTHY READS & MEME

• Decentralised’s read on the YFI trade.

• Our Network’s read on DeFi mega issue.

• An Ape’s Prologue’s read on the rise of RWAs.

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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.