🤹‍♀️ 1 big thing: Amber Vittoria 

Photo illustration of Amber Vittoria with abstract shapes.

🔐 2. Members only 

🏃‍♀️ 3. Catch up quick 

Top coins

🎤 4. Culture hash IRL

Three guys Crystal Kim met at NFT.NYC 2022.

Hello, Thursday! Today we're doing an NFT.NYC takeover, talking to artist and poet Amber Vittoria, diving into conference hijinks and asking random passersby about the state of the crypto market. 

The three-day confab was wild. Were you there? Send us pics of what you saw: crypto@axios.com.

This newsletter was edited by Pete Gannon and is 1,203 words, a 4.5-minute read.

What do y'all think is the next big thing? —B & C

National

Follow how cryptocurrency and blockchain are upending markets and the regulatory shifts. With Brady Dale.

Axios Crypto

👯‍♀️ 1 big thing: Ethereum — the sequel

Illustration of the Ethereum logo peeking out from behind a curtain.

🙏 2. Charted: Think of the users

💸 3. Coin emissions: Number go up because number go down

Illustration of pixelated game coins arranged in order of ascending size

🚴‍♀️ 4. Catch up quick 

🪨 5. No more mining? Really? 

TGIF! Today we are going to dive into one of the biggest topics in blockchain: Ethereum's coming transition to Ethereum 2.0 (aka, The Merge).

🚨 Situational awareness: Hackers struck layer-1 blockchain Harmony's Horizon bridge, stealing roughly $100 million.

🦻 How many ETH maxis are reading this? Please email us! Don't be shy: crypto@axios.com. And don't forget to follow us on Twitter and give us ideas there: Crystal and Brady.

This newsletter was edited by Pete Gannon and is 1,240 words, a 5-minute read.

💭 Brady's thought bubble: This change is epic and, frankly, I expect chaos. A black swan that rivals The DAO could hit Ethereum as v2 goes live, but I've been wrong before. 

🪤 1 big thing: Blockchain censorship by ISPs

Illustration of a fist crushing a digital glowing block.

🧾 2. Charted: Bargain hunters

🦸‍♂️ 3. FTX taking on the role of lender of last resort

Illustration of connected "bitcoins" with a college of rectangles and money in the background

🏃‍♀️ 4. Catch up quick

⏳ 5. Culture hash: Capitalist bails out capitalist

A tweet about the BlockFi/FTX deal not being a bailout. 

Hello! Today we're all about blockchain security and crypto company rescue.

✍️ Crystal is at NFT.nyc, and Brady is watching the inboxes. Email us: crypto@axios.com.

This newsletter was edited by Pete Gannon and is 1,012 words, a 4-minute read.

Programming note: Tomorrow should be all about NFT.nyc, and Friday should be all about the next phase of Ethereum. —C & B

⚠️ 1 big thing: Crypto finance isn't always "DeFi"

Illustration of a collage of circles made of money forming a decentralized web.

⛷ 2. Tether market cap continues its slide

🐋 3. Whales still like bitcoin best

Illustration of a whale’s tail emerging from a sea of pixelated coins.

🧮 5. Culture hash: Fortis fortūna adiuvat 

TGIF! (Though there are no days off in crypto.) Today we explain DeFi, what whales want and Matt Damon. 

🥺 We will be away Monday in observance of Juneteenth, as will a growing number of private employers. The email lines will still be open: crypto@axios.com.

Have you seen any stories elsewhere that we haven't picked up that you're curious about?

This newsletter was edited by Pete Gannon and is 1,143 words, a 4-minute read.

💡 Join Axios’ Russell Contreras, Delano Massey and Aja Whitaker-Moore today at 12:30pm ET for a virtual event exploring Juneteenth and the significance of African American culture and contributions to the nation, featuring guests from politics and business. Register here.

📹 1 big thing: BitBoy's gripe

Photo illustration of Ben Armstrong and the Celsius logo surrounded by geometric shapes 

🎢 2. Charted: Wild weekend

🎨 3. Loans for art

🚤 4. Catch up quick 

🤡 5. Culture hash: Fake but funny

An anti-nft protest in NYC. It's not real.

Happy Tuesday! Fun weekend for crypto true believers (😄). Today we dive into one crypto influencer's gripes about a faltering lender, a venture round for NFT finance and a protest. 

And NFT.NYC 2022 has officially kicked off! In town? Tell us about what you're getting into: crypto@axios.com. 

This newsletter was edited by Javier E. David, and is 972 words — a 3.5-minute read.

We hope you didn't sell the bottom. But even if you did, everyone has done it. It's fine. — C & B

Astaria, a decentralized finance (DeFi) project co-founded by ConsenSys and SushiSwap alum Joseph DeLong, has raised $8 million in a round that included True Ventures, Arrington Capital, Wintermute and many others. 

The platform will allow holders of valuable non-fungible tokens to lock them up as collateral and borrow crypto against them, so the holders can then buy other NFTs, plus trade and invest in decentralized finance. For borrowers, liquidity is instant and liquidations are more predictable.

Astaria should launch in Q3, according to the project. It's doing demos at NFT.NYC on June 22.

Driving the news: Amid a brutal downturn in all things crypto-related, a lot of the air has been let out of the NFT market. But Astaria's fundraising success suggests the obituary for the sector may have been prematurely written. 

There's still a lot of wealth trapped in non-fungible tokens. Volume is down considerably in the NFT market, but it's definitely not gone, DeLong's cofounder Justin Bram told Axios. 

Lending against NFTs allows holders to access that wealth and put it to work. But there's still a lot of turmoil in the industry.

Right now at least one major hedge fund, Three Arrows Capital, is getting margin-called, and it's probably selling a lot of extremely valuable NFTs as it goes. 

Still, "with our system they wouldn't have to default," Bram said. In theory, they could access part of the value of those NFTs with loans instead.

Normal people could benefit as well. "A lot of these people who hold apes are NFT-rich and cash-poor, and we want to fix that," DeLong said, referring to the Bored Apes Yacht Club, the most valuable single collection of NFTs in the world right now. 

Situational awareness: Decentralized finance and NFTs have been dancing around each other since at least 2020. Astaria is not the only company to enter the NFT lending space, but it believes it can advance the product significantly for users. 

"We think this will add rocket fuel into the NFT industry," DeLong said.

Prior entrants include NFTfi, JPEG'd and Metalend. 

Astaria uses an appraisal system in which a knowledge worker writes a term sheet about an NFT that reflects its particular characteristics. The appraiser decides how much can be lent against the NFT, the length of the loan and the interest rate, and can even craft some special terms.

If investors like the term sheet, they can post assets for borrowers. If borrowers like it, they can accept the loan. 

Loans that perform will drive income to appraisers, so they have an incentive to write terms the market will like. 

Astaria has also crafted special functions so that borrowers can still "use" their NFTs somewhat if something special comes up (such as accessing a party or unlocking a gift for holders).

Be smart: Price discovery in NFTs is very tricky. All Bored Apes are not the same (not even close), for example. 

As DeLong explained, if you have 100 of some NFT and somebody buys one of them for a million dollars, that definitely does not mean you have a $100 million collection. 

Reality check: It's a complete bear market in crypto, and future growth is looking dicey at best. So it might seem like a crazy time to build a company around lending against JPEGs. 

But the Astaria team is looking 3-5 years out, toward the next generation of NFTs that do much more than early versions. 

"We're very much focused on the long game," Bram said. 

Astaria raises $8M for NFT-backed loans

Astaria is looking 3-5 years out, toward the next generation of NFTs.

Illustration of an incredibly large and thick frame around a very small miniscule image. 

Cryptocurrencies

<a class="gtmContentClick" data-vars-link-text="Astaria" data-vars-click-url="https://www.astaria.xyz/" data-vars-content-id="1910db0b-c661-4e30-a38c-055abe3fd235" data-vars-headline="Astaria raises $8M for NFT-backed loans" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.astaria.xyz/" target="_blank">Astaria</a>, a <a class="gtmContentClick" data-vars-link-text="decentralized finance" data-vars-click-url="https://www.axios.com/2022/06/17/crypto-finance-defi-decentalized-circle" data-vars-content-id="1910db0b-c661-4e30-a38c-055abe3fd235" data-vars-headline="Astaria raises $8M for NFT-backed loans" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/06/17/crypto-finance-defi-decentalized-circle" target="_self">decentralized finance</a> (DeFi) project co-founded by ConsenSys and SushiSwap alum Joseph DeLong, has raised $8 million in a round that included True Ventures, Arrington Capital, Wintermute and many others. The platform will allow holders of valuable non-fungible tokens to lock them up as collateral and borrow crypto against them, so the holders can then buy other NFTs, plus trade and invest in decentralized finance. For borrowers, liquidity is instant and liquidations are more predictable.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Since the bear market in crypto set in in early May, users have been redeeming the stablecoin tether (USDT) for dollars at a high rate.

Why it matters: The dollar-backed tether has been the liquidity lubricant that has made crypto markets work. It's the main partner in trading pairs with cryptocurrencies on exchanges all over the world.

Be smart: Tether's dropping along with the rest of the cryptocurrency market, but it works differently with a stablecoin.

When the market cap of a stablecoin drops, it's because that actual supply is dropping (whereas bitcoin's market cap drops with price, but the supply stays the same).

Meanwhile, its rival, usd coin, has been increasing supply, suggesting some users are switching.

Through June 16; Data: CoinGecko; Chart: Axios Visuals

By the numbers: Tether reached an all-time high market cap over $83 billion in May, but has shed 17% of its supply since.

Every day for the last week it has shed over a hundred million tether, some days, nearly a billion.

Each tether is meant to be redeemable for one U.S. dollar.

In a mid-May attestation, it said it had $82.4 billion in reserves. Of that, it noted that $20.1 billion was in commercial paper and $39.2 billion was in U.S. treasuries.

Be smart: Tether's commitment to transparency has long been a cause for concern.

Stablecoin tether's market cap continues its slide

Since the bear market in crypto set in in early May, users have been redeeming the stablecoin for dollars at a high rate.

Since the bear market in crypto set in in early May, users have been redeeming the stablecoin tether (USDT) for dollars at a high rate.Why it matters: The dollar-backed tether has been the liquidity lubricant that has made crypto markets work. It&#x27;s the main partner in trading pairs with cryptocurrencies on exchanges all over the world.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

This is how markets unwind, and, with blockchains, savvy users can all watch it live as it goes down. 

Over the last few days, crypto watchers have been captivated by two large wallets that appear to be linked, that contain $181 million in ether (ETH). They also have collateral in loans that are right on the edge of solvency. 

Most of the debts are on the money market Aave (152,098.98 ETH worth $166 million at the time of writing, but the rest is on Compound (14,316.90 ETH worth $15.6M). 

Why it matters: If the price of ether falls further, these debts will be liquidated, unleashing a gush of ether onto the market, which will drive the price of ether down even further. 

Driving the news: Crypto's winter is turning increasingly frigid, with Bitcoin sinking below the psychologically-charged $20,000 level early Saturday, and ether briefly dipping below $1000 as investors bail on digital coins. Both have shed over 30% of their value in the last week alone.  

With a whale in a dangerous position like this, traders who believe ether will return to its prior highs in the long term now have an incentive to sell. If it goes down enough, big loans like these will be liquidated and drive the price down even more. 

That could be their signal to buy again, increasing their total ETH holdings for free, but only after the market's longs take serious pain. 

Meanwhile, liquidations are surging at decentralized finance lenders right now, with $250.6 million of liquidations taking place on Aave, Compound and MakerDAO over the last 7 days, according to Dune Analytics. 

@lightcrypto watching a bit ethereum wallet

A trading account with 165,000 followers noting 0x493F's precarious position. Screenshot: @lightcrypto (Twitter)

Details: The wallets in question are 0x493F and 0x7160. For the first wallet, scroll down to Aave v2 and see the largest loan. 

These wallets appear to be related, because they can be seen making larger transfers of ether, from the former to the latter, here and here, prior to topping up collateral on Compound loans.

One might naturally ask: Why not just close out the loans? They can't, because the wallets are levered long. The owner has deposited ETH, borrowed stablecoins, bought more ETH, and deposited that to borrow more stablecoins to do it again. And so on. 

ZoomerAnon of the team at DeFi analytics company Uniwhales, explained that you can see the wallet repeatedly taking stablecoins liked USDT and USDC, sending it to Binance, and withdrawing thousands of ethers. 

Early January, multiple transactions like this could be seen using Etherscan. 

Be smart: Traders lever long when they believe an asset's price will go higher. If it does, they can withdraw enough to repay their loan, withdraw their collateral and come out of the trade with more of the underlying asset.

Yes, but: It only works if the asset's price goes up. 

These wallets were making bets that ether would go up further back in January, when it was trading at over $3,300. Today it's barely holding $1,000.

"He borrowed 96,040 ETH prior to borrowing any money," ZoomerAnon told Axios over Telegram. 

DeFi lenders are automated. They monitor prices of collateral to make sure each loans are properly collateralized. As soon as collateral becomes inadequate, these protocols automatically sell the underlying collateral on the open market.

Whenever a borrower is liquidated, they take a painful haircut. When they have levered their position, that haircut is multiplied. 

By the numbers: One researcher calculated that the largest position, on Aave, will be liquidated at a $982 ETH price. Uniwhales puts his liquidation price at $870.

ETH would need to fall $212, almost 20%, to trigger that lower price. That said, ETH has lost $212 in value since June 13, and almost $900 since June 1. 

The intrigue: It's speculated that these positions are owned by a major Chinese entrepreneur, but he might be operating alone, without the sophisticated risk modeling of trading firms and without the ability to watch positions around the clock. 

That said, if the owner has liquid capital, they can always buy stablecoins and close out some of the dead positions, staving off liquidation. 

Thought bubble: This might sound like another giant disaster ahead in the crypto world, but there's another way to view it: as a transparent marketplace, functioning as expected.

A $181M ether bet gone bad is unfolding in real time

This is how markets unwind, and, with blockchains, savvy users can all watch it live as it goes down.

Illustration of a robot with a dollar sign screen on its face

This is how markets unwind, and, with blockchains, savvy users can all watch it live as it goes down. Over the last few days, crypto watchers have been captivated by two large wallets that appear to be linked, that contain $181 million in ether (ETH). They also have collateral in loans that are right on the edge of solvency. <ul><li>Most of the debts are on the money market Aave (152,098.98 ETH worth $166 million at the time of writing, but the rest is on Compound (14,316.90 ETH worth $15.6M). </li></ul>Why it matters: If the price of ether falls further, these debts will be liquidated, unleashing a gush of ether onto the market, which will drive the price of ether down even further. Driving the news: Crypto&#x27;s winter is turning increasingly frigid, with Bitcoin sinking <a class="gtmContentClick" data-vars-link-text="below the psychologically-charged $20,000" data-vars-click-url="https://www.axios.com/2022/06/18/bitcoin-falls-below-20k-first-time-2020" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/06/18/bitcoin-falls-below-20k-first-time-2020" target="_self">below the psychologically-charged $20,000</a> level early Saturday, and ether briefly dipping below $1000 as investors bail on digital coins. Both have <a class="gtmContentClick" data-vars-link-text="shed over 30% of their value" data-vars-click-url="https://finance.yahoo.com/news/bitcoin-price-june-17-2022-203000768.html" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://finance.yahoo.com/news/bitcoin-price-june-17-2022-203000768.html" target="_blank">shed over 30% of their value</a> in the last week alone. With a whale in a dangerous position like this, traders who believe ether will return to its prior highs in the long term now have an incentive to sell. If it goes down enough, big loans like these will be liquidated and drive the price down even more. <ul><li>That could be their signal to buy again, increasing their total ETH holdings for free, but only after the market&#x27;s longs take serious pain. </li><li>Meanwhile, liquidations are <a class="gtmContentClick" data-vars-link-text="surging" data-vars-click-url="https://www.axios.com/newsletters/axios-crypto-6d848d45-1325-4b93-85a8-7513a1ea7cd2.html" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/newsletters/axios-crypto-6d848d45-1325-4b93-85a8-7513a1ea7cd2.html" target="_self">surging</a> at <a class="gtmContentClick" data-vars-link-text="decentralized finance" data-vars-click-url="https://www.axios.com/2022/06/17/crypto-finance-defi-decentalized-circle" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/06/17/crypto-finance-defi-decentalized-circle" target="_self">decentralized finance</a> lenders right now, with $250.6 million of liquidations taking place on Aave, Compound and MakerDAO over the last 7 days, <a class="gtmContentClick" data-vars-link-text="according to Dune Analytics" data-vars-click-url="https://dune.com/dsalv/Liquidations" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://dune.com/dsalv/Liquidations" target="_blank">according to Dune Analytics</a>. </li></ul><figure><img alt="@lightcrypto watching a bit ethereum wallet" height="2160" id="d14bde54-d08d-4c6e-8b57-c5b1457c8d49" src="https://images.axios.com/o4Ruahind-hxX8CP2xaf7oj2nZU=/2022/06/17/1655505091505.jpg" width="3840"/><figcaption>A trading account with 165,000 followers noting 0x493F&#x27;s precarious position. Screenshot: @lightcrypto (<a class="gtmContentClick" data-vars-link-text="Twitter" data-vars-click-url="https://twitter.com/lightcrypto/status/1537840394519601154" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://twitter.com/lightcrypto/status/1537840394519601154" target="_blank">Twitter</a>)</figcaption></figure>Details: The wallets in question are <a class="gtmContentClick" data-vars-link-text="0x493F" data-vars-click-url="https://etherscan.io/address/0x4093fbe60ab50ab79a5bd32fa2adec255372f80e" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://etherscan.io/address/0x4093fbe60ab50ab79a5bd32fa2adec255372f80e" target="_blank">0x493F</a> and <a class="gtmContentClick" data-vars-link-text="0x7160" data-vars-click-url="https://etherscan.io/address/0x716034c25d9fb4b38c837afe417b7f2b9af3e9ae" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://etherscan.io/address/0x716034c25d9fb4b38c837afe417b7f2b9af3e9ae" target="_blank">0x7160</a>. For the first wallet, <a class="gtmContentClick" data-vars-link-text="scroll down to Aave v2" data-vars-click-url="https://debank.com/profile/0x4093fbe60ab50ab79a5bd32fa2adec255372f80e" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://debank.com/profile/0x4093fbe60ab50ab79a5bd32fa2adec255372f80e" target="_blank">scroll down to Aave v2</a> and see the largest loan. <ul><li>These wallets appear to be related, because they can be seen making larger transfers of ether, from the former to the latter, <a class="gtmContentClick" data-vars-link-text="here" data-vars-click-url="https://etherscan.io/tx/0xa94b54b660d8265614f70fff06d3e5dd549c752a8f95ede3f39f12edc64013c2" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://etherscan.io/tx/0xa94b54b660d8265614f70fff06d3e5dd549c752a8f95ede3f39f12edc64013c2" target="_blank">here</a> and <a class="gtmContentClick" data-vars-link-text="here" data-vars-click-url="https://etherscan.io/tx/0xd4c892f84c502b33735250ff2fafe9f21a107258e77da2847886091df29e282d" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://etherscan.io/tx/0xd4c892f84c502b33735250ff2fafe9f21a107258e77da2847886091df29e282d" target="_blank">here</a>, prior to topping up collateral on Compound loans.</li></ul>One might naturally ask: Why not just close out the loans? They can&#x27;t, because the wallets are levered long. The owner has deposited ETH, borrowed stablecoins, bought more ETH, and deposited that to borrow more stablecoins to do it again. And so on. <ul><li>ZoomerAnon of the team at DeFi analytics company <a class="gtmContentClick" data-vars-link-text="Uniwhales" data-vars-click-url="https://www.uniwhales.io/" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.uniwhales.io/" target="_blank">Uniwhales</a>, explained that you can see the wallet repeatedly taking stablecoins liked USDT and USDC, sending it to Binance, and withdrawing thousands of ethers. </li><li>Early January, multiple transactions like this <a class="gtmContentClick" data-vars-link-text="could be seen" data-vars-click-url="https://etherscan.io/txs?a=0x4093fbe60ab50ab79a5bd32fa2adec255372f80e&amp;p=5" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://etherscan.io/txs?a=0x4093fbe60ab50ab79a5bd32fa2adec255372f80e&amp;p=5" target="_blank">could be seen</a> using Etherscan. </li></ul>Be smart: Traders lever long when they believe an asset&#x27;s price will go higher. If it does, they can withdraw enough to repay their loan, withdraw their collateral and come out of the trade with more of the underlying asset.Yes, but: It only works if the asset&#x27;s price goes up. <ul><li>These wallets were making bets that ether would go up further back in January, when it was trading at over $3,300. Today it&#x27;s barely holding $1,000.</li><li>&quot;He borrowed 96,040 ETH prior to borrowing any money,&quot; ZoomerAnon told Axios over Telegram. </li></ul>DeFi lenders are automated. They monitor prices of collateral to make sure each loans are properly collateralized. As soon as collateral becomes inadequate, these protocols automatically sell the underlying collateral on the open market.<ul><li>Whenever a borrower is liquidated, they take a painful haircut. When they have levered their position, that haircut is multiplied. </li></ul>By the numbers: <a class="gtmContentClick" data-vars-link-text="One researcher calculated" data-vars-click-url="https://twitter.com/onchainwizard/status/1537589475957624833?s=12&amp;t=ExTs2oLCrMvTqYJEVZ96Ug" data-vars-content-id="52fe6517-d1c9-4fa1-b4df-7f04782e6579" data-vars-headline="A $181M ether bet gone bad is unfolding in real time" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://twitter.com/onchainwizard/status/1537589475957624833?s=12&amp;t=ExTs2oLCrMvTqYJEVZ96Ug" target="_blank">One researcher calculated</a> that the largest position, on Aave, will be liquidated at a $982 ETH price. Uniwhales puts his liquidation price at $870.<ul><li>ETH would need to fall $212, almost 20%, to trigger that lower price. That said, ETH has lost $212 in value since June 13, and almost $900 since June 1. </li></ul>The intrigue: It&#x27;s speculated that these positions are owned by a major Chinese entrepreneur, but he might be operating alone, without the sophisticated risk modeling of trading firms and without the ability to watch positions around the clock. <ul><li>That said, if the owner has liquid capital, they can always buy stablecoins and close out some of the dead positions, staving off liquidation. </li></ul>Thought bubble: This might sound like another giant disaster ahead in the crypto world, but there&#x27;s another way to view it: as a transparent marketplace, functioning as expected.

dydx, a major player in the Ethereum ecosystem, is jumping ship to build its fourth version in another blockchain ecosystem linked to Cosmos.

Why it matters: Ethereum is the world's second biggest blockchain and is home to all the blue chip decentralized finance (DeFi) protocols. The fact that dydx, one of DeFi's blue chip applications, is jumping ship to Cosmos is a major win for that ecosystem.

Driving the news: dydx, an exchange, announced Wednesday that it is building its next version using Tendermint, joining the Cosmos ecosystem of blockchains.

By the numbers: Cosmos is currently the 28th largest blockchain by market cap, at $2.1 billion, according to CoinMarketCap. 

dydx currently leads all DeFi projects on Ethereum in protocol revenue at $19.7 million over the last 30 days, according to TokenTerminal, with more than 60,000 unique users over its lifetime.

What they're saying: “After exploring the landscape of current and upcoming blockchain technologies, we decided that Cosmos would allow us to build the best fully decentralized protocol," the company wrote in its announcement. 

In the weeds: dydx will actually launch a standalone blockchain to run its new version, in keeping with the ethos of Cosmos.

Cosmos functions as an integrated network of what it calls "appchains." Each application has its own blockchain that all easily communicate with each other.

Ethereum, in contrast, is one blockchain that hosts many applications.

Of note: Anyone can launch a Tendermint blockchain and integrate their application with the broader Cosmos ecosystem. Cosmos-Cap is tracking 40 different applications already running on Cosmos. 

Be smart: The features dydx offers are for advanced traders, such as margin and leveraged trades. It also offers perpetual markets for long and short positions in many assets. 

The bottom line: The announcement promises that this new development will allow the app to scale up its throughput to a degree that no other blockchain will be able to compete with. 

A DeFi blue chip is jumping ship from Ethereum for its next version

The fact that dydx is choosing Cosmos is a major win for that ecosystem.

Illustration of two hands exchanging different size bills

dydx, a major player in the Ethereum ecosystem, is jumping ship to build its fourth version in another blockchain ecosystem linked to Cosmos.Why it matters: Ethereum is the world&#x27;s second biggest blockchain and is home to all the blue chip decentralized finance (DeFi) protocols. The fact that <a class="gtmContentClick" data-vars-link-text="dydx" data-vars-click-url="https://dydx.exchange/" data-vars-content-id="b1495ed7-18a3-4f90-8bae-9b31dc687112" data-vars-headline="A DeFi blue chip is jumping ship from Ethereum for its next version" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://dydx.exchange/" target="_blank">dydx</a>, one of DeFi&#x27;s blue chip applications, is jumping ship to Cosmos is a major win for that ecosystem.

If something is financial and in crypto, does that mean it counts as "decentralized finance," or "DeFi"? Short answer: No.

Why it matters: The question is more salient right now, with crypto lender Celsius Network locking up users' deposits as questions swirl about its solvency, drawing interest from several state regulators.

Celsius is a crypto company funded with an initial coin offering. It gives people interest on deposits in bitcoin and ether. So does that make it DeFi? Also: No.

Reality check: DeFi founders propose a different model for financial operations, one where everyone always operates by the exact same rules as everyone else, risk is always completely clear and no one gets a special deal.

What is DeFi? All the financial operations occur autonomously, on a blockchain, using a kind of computer program that blockchain types refer to as a "smart contract" (but I like to call a "robot on the internet").

Take a DeFi lender: Every single interest-earning deposit and every single loan that's accruing interest can be seen on the blockchain. Similarly, every liquidity provider on an automated market maker can also be viewed, along with every trade it makes in each block.

Compound Finance, one of the earliest DeFi money markets, shows daily updates for the total deposited and the total borrowed in each asset it supports right on its website. Here's where you can find the stats for ether. It currently has $717 million in ETH deposits and $13.7 million lent out.

If you have the skills, you could make your own portal that gave you updates every minute.

The problem isn't access to the information. The problem is making sense of it because so much is available.

On the other hand: Celsius doesn't work anything like this. Going all the way back to 2019, onlookers raised concerns about the transparency of its operation. 

At its core, Celsius has always promised to return much more of the income it makes from loans to its users than traditional banks do.

What it didn't promise, however, was to make it clear how it earned those returns on a day-to-day basis.

Threat level: A DeFi platform couldn't suddenly lock out users' deposits, as Celsius did this week. If it were even possible, they would have to post a proposal for a public vote and discussion first (giving everyone more than enough time to go into a bank run).

How decentralized, though?  A project is considered decentralized when it's controlled by lots and lots of people. For example, a project with 1,000 people with a vote over its future would be less decentralized than one with 10,000 people with say.

That said, many DeFi projects are, in practical terms, controlled by a few people with most of the tokens. 

Our thought bubble: Decentralization might have been the wrong place to put emphasis, though "DeFi" sounds like "defy" — which is fun. Maybe SeeFi could have been better? As in, users can "see" what's going on. 

Crypto finance isn't always "DeFi"

The question is more salient right now with crypto lender Celsius locking up users' deposits, drawing interest from regulators.

If something is financial and in crypto, does that mean it counts as &quot;decentralized finance,&quot; or &quot;DeFi&quot;? Short answer: No.Why it matters: The question is more salient right now, with crypto lender Celsius Network <a class="gtmContentClick" data-vars-link-text="locking up users&#x27; deposits" data-vars-click-url="https://www.axios.com/pro/fintech-deals/2022/06/13/celsius-pauses-withdrawals" data-vars-content-id="c26e5dd4-f9b1-4cce-a36d-b0c6735628c9" data-vars-headline="Crypto finance isn&#x27;t always &quot;DeFi&quot;" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/fintech-deals/2022/06/13/celsius-pauses-withdrawals" target="_self">locking up users&#x27; deposits</a> as questions swirl about its solvency, <a class="gtmContentClick" data-vars-link-text="drawing interest" data-vars-click-url="https://www.cnbc.com/2022/06/16/state-securities-regulators-investigating-celsius-accounts-freeze.html" data-vars-content-id="c26e5dd4-f9b1-4cce-a36d-b0c6735628c9" data-vars-headline="Crypto finance isn&#x27;t always &quot;DeFi&quot;" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.cnbc.com/2022/06/16/state-securities-regulators-investigating-celsius-accounts-freeze.html" target="_blank">drawing interest</a> from several state regulators.

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A DeFi blue chip is jumping ship from Ethereum for its next version

Astaria raises $8M for NFT-backed loans

A $181M ether bet gone bad is unfolding in real time

Stablecoin tether's market cap continues its slide

Crypto finance isn't always "DeFi"

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