Investment giant Goldman Sachs is said to be attempting to raise US$2 billion in an effort to buy the assets of distressed crypto lending firm Celsius amid the current turmoil engulfing the cryptocurrency industry.
The capital would allow Goldman Sachs to buy Celsius’ assets at a massive discount, should the company file for bankruptcy:
💥BREAKING: Goldman Sachs to buy Celsius assets if it becomes bankrupt.
The bank has been looking into commitments from Web3 crypto funds specialising in distressed assets, and traditional financial institutions with cash on hand. The assets to be acquired, most likely cryptocurrencies having to be sold at a low, would then likely be managed by participants taking part in the fundraising.
However, angel investor Simon Dixon has claimed that the rumours are fake news, according to a “source” at Goldman Sachs:
More updates to follow, but the word from my source at @GoldmanSachs is there is no @CelsiusNetwork deal with them. It’s fake news according to them💪 This is not coming from Celsius. I will reveal what I can when I can and remain in keeping with NDAs. pic.twitter.com/nicJLV46aN
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) June 25, 2022
Drama unfolded earlier this month with Celsius when the crypto lender had to halt withdrawals as well as other services on its platform, but only after it transferred over US$300 million in digital assets to FTX.
Users May Yet Be Left High and Dry
Concerns also exist that Celsius may be left unable to pay out users wanting to withdraw their funds if the value of staked ETH doesn’t regain parity with ETH. Staked ETH, which is extensively used by Celsius, started to lose parity with ETH when DeFi markets were sent into a spiral following the collapse of the Terra ecosystem. In the time since, Celsius has hired the restructuring consulting firm Alvarez & Marsal.
The company has also reached out to restructuring attorneys from the law firm Akin Gump Strauss Hauer & Feld. Additionally, global investment bank Citigroup has been employed by Celsius to advise on possible solutions, which include an assessment of an offer from rival crypto lender Nexo. Citigroup and Akin Gump have both recommended that Celsius file for bankruptcy.
After pausing all withdrawals, swaps and transfers between accounts on June 13, there are now fears the popular staking platform Celsius is facing a more serious liquidity crisis triggered by the declining value of Lido Finance’s staked ETH token relative to the value of real ETH.
If the value of staked ETH doesn’t regain parity with ETH, it is feared Celsius may be left unable to pay out all users wanting to withdraw their funds.
Staked ETH, which is used extensively by Celsius, started to lose parity with ETH when DeFi markets were sent into chaos last month in the wake of the Terra ecosystem collapse.
What Is Staked ETH?
Staked ETH (stETH) is an artificial representation of ETH created by the DeFi platform Lido Finance. When users stake their ETH through Lido, it’s not locked up as it would be if it were staked directly to Ethereum 2.0.
Rather, any ETH users who stake through Lido receive the equivalent amount of stETH in return, allowing them to then lend, stake or trade their stETH for other tokens. This kind of staking is known as liquid staking because the users’ assets effectively stay liquid.
Regular crypto users along with other DeFi platforms can use Lido Finance to stake real ETH in return for stETH. Celsius is one of Lido Finance’s major clients, staking large amounts of ETH through Lido on behalf of its users, and in the process generating staking rewards, with which it in turn pays its users’ annual percentage yield (APY).
This system of liquid staking works well while stETH and ETH maintain parity. But once stETH starts to drop in value, as it now has, the system starts to unravel.
What Does This Mean for Celsius?
According to blockchain analytics platform Nansen Research, Celsius has over US$475 million worth of stETH and has been sending large quantities to exchanges over the past few days, presumably to sell in an attempt to increase liquidity.
Unfortunately, this also has the effect of reducing the price of stETH, exacerbating the disparity between stETH and ETH. Other whales have also been selling large amounts of stETH over the past few days, which has further suppressed the price of stETH and increased pressure on Celsius.
In addition, according to Jack Niewold, founder of the Crypto Pragmatist newsletter, only around US$1.5 billion of the $US10 billion worth of customer assets held by Celsius are currently accounted for on-chain, a rather large discrepancy that has further spooked users.
It’s not known if Celsius has the remaining user funds and, if it does, where they are exactly. Niewold provides a fascinating breakdown in a detailed Twitter thread:
THE CELSIUS BLOWUP, EXPLAINED.
Huge sectors of crypto are imploding, and crypto unicorns might be coming down with it.
Luna was first, but now $10b giant Celsius is facing insolvency and even bankruptcy.
Ethereum developers completed a significant milestone towards Ethereum’s eventual full transition to a proof-of-stake blockchain on June 8, by merging the Ropsten testnet’s original proof-of-work chain with its new proof-of-stake chain:
The planned merge of the Ropsten testnet was first announced on June 3, when it was described by Ethereum developer Tim Beiko as a “dress rehearsal for node operators”.
Ethereum co-founder Vitalik Buterin has previously said that if all goes well with the Ropsten merge, he anticipates the mainnet merge will take place around August of this year.
Merge Will Reduce Energy Use by Orders of Magnitude
Ethereum is currently a proof-of-work chain, which means miners use large amounts of energy to solve complex mathematical puzzles to verify new transactions, in the process earning ETH. This process is energy-intensive, largely due to the fact that the energy used by miners that don’t solve the puzzles is essentially wasted.
Once the network transitions to proof-of-stake, there will no longer be miners – they’ll be replaced by validators. Validators will also verify transactions, but rather than relying on massive computing power to do so, validators will be selected based on the amount of ETH they’ve staked and the duration they’ve staked it.
Speaking on a livestream before the Ropsten merge, Buterin was hopeful that a smooth test merge would demonstrate how far the developers have progressed along the path towards proof-of-stake, and suggested if all goes well the upgrade could be applied to mainnet fairly easily:
We’re hoping it’s going to be a good demonstration of just how far we’ve come. If everything goes well, it basically means that we’re just a bit of polishing away from the merge being able to happen on mainnet.
Vitalik Buterin, Ethereum co-founder
Ropsten is Ethereum’s oldest testnet and is considered the testnet most similar to the Ethereum mainnet, meaning that theoretically any changes on Ropsten should transfer smoothly to mainnet.
Other important metrics, such as fees collected and daily active addresses, mirror the drop in transaction volume.
This pattern is similar to what was observed during the last bear market where activity declined significantly across the entire crypto market.
Interest in NFTs Drops, Prices Follow
Following the huge NFT hype of the early part of 2022, interest has since declined enormously with Google search data showing a 75 percent reduction in searches for the term NFT, contributing significantly to the drop in transaction volume on Ethereum.
NFT search volume. Source: IntoTheBlock
Similarly, NFT prices crashed in May with most collections recording decreases of at least 50 percent, significantly more than ETH itself, which dropped about 30 percent over the same timeframe.
ETH HODLers Accumulate During Crashes
As ETH transactions and its price have plunged, long-term HODLers (addresses that’ve been holding ETH for over a year) have started to accumulate and now hold over 50 percent of total ETH supply. It’s the first time this mark has been reached since 2020.
ETH HODLers marshal their resources. Source: IntoTheBlock
In the latter part of 2021 and into early 2022, HODLers had been selling. But they’re now buying the dip with a view to maximising their gains when (they hope) the market recovers.
ETH 2.0 Staking Grows
According to IntoTheBlock, the single largest holder of ETH is currently the Ethereum 2.0 staking contract, which now holds over 7.84 million ETH.
The Ethereum 2.0 staking contract has become the largest holder of $ETH.
There are now 7.84m ETH, meaning that the contract has been growing at a pace of 23,442 Ether per day, with a total 51,200 unique addresses depositing. pic.twitter.com/VTlYy6AWyg
Ethereum’s public testnet, known as Ropsten, is in the final stages of preparation to merge its existing proof-of-work (PoW) chain with the new proof-of-stake (PoS) chain, as revealed by a pull request submitted to the Ethereum GitHub depository on May 18.
The test merge, expected to take place next month, is regarded as a major milestone in Ethereum’s migration from a PoW chain to a PoS chain. This news comes after a delay to the mainnet merge, which was pushed back to some time in Q3 of this year, having previously been expected to happen in June.
Code Updates Prepare Testnet For Merge
The pull request, which was merged into the code base on May 19 by Ethereum Foundation DevOps engineer Parithosh Jayanthi, added the configuration files required by Ropsten testnet clients to create a genesis version of the consensus layer, the first step in merging the PoW execution layer and the PoS consensus layer.
A tweet from Ethereum researcher Terence Tsao indicates the genesis version of the consensus layer will be created on May 30, with the full merge expected to take place around June 8:
Ropsten-beacon-chain config has been merged! Expect client releases 🔜
As the Ethereum merge has neared, the original PoW execution layer codebase and the new PoS consensus layer codebase – once two largely separate projects – have become increasingly interconnected, prompting the Ethereum Foundation to merge its two bug bounty programs into a single unified program.
This move reflects the reality that the two codebases are close to becoming a single entity and also incentivises bug hunters to identify bugs relating to the integration of the two codebases, as Ethereum Foundation developer Fredrik Svantes explained:
As the Execution Layer and Consensus Layer become more and more interconnected, it is increasingly valuable to combine the security efforts of these layers. There are already multiple efforts being organised by client teams and the community to further increase knowledge and expertise across the two layers. Unifying the Bounty Program will further increase visibility and coordination efforts on identifying and mitigating vulnerabilities.
Fredrik Svantes, developer, Ethereum Foundation
The Foundation has also significantly increased the rewards on offer, including a maximum US$500,000 paid in ETH or DAI. That’s a tenfold increase over the previous maximum reward for bugs identified on the consensus layer, and double that for bugs found on the execution layer.
The merging of the Ropsten public testnet follows the implementation of the mainnet ‘shadow fork’ last month, suggesting the mainnet merge may be coming in the next few months.
With Ethereum’s move to Proof-of-Stake (PoS) getting closer developers have created a “shadow fork” that will allow them to test the new configuration on mainnet-like conditions.
A critical testing period for Ethereum’s move to Proof-of-Stake (PoS) from the power heavy Proof-of-Work (PoW) consensus algorithm has been initiated. The so-called “shadow fork” will be implemented to test the effects of the transition under the network’s current circumstances.
According to a tweet from Marius Van Der Wijden – an Ethereum software developer – this is an historic moment for Ethereum: “Today will be the first mainnet shadow fork ever.”
Ethereum Foundation developer Parithosh Jayanthi also tweeted that this was a good opportunity for the community to “practise running their nodes, deploying contracts, testing infrastructure, etc”, so they can get used to the “post-merge world”.
What is a ‘Shadow Fork’?
The term “shadow fork” refers to copying mainnet data to a testnet where developers can test new features under realistic conditions before deploying major changes on the mainnet:
At the time of writing, the shadow fork had processed over 5 million transactions with an average block time of 14.2 seconds, according to the BlockExplorer page shared by Van Der Wijden.
To reiterate, a shadow fork does not affect the canonical chain in any meaningful way. Transactions submitted to the shadow fork could be included in the main chain as well. Proceed with extreme caution!
Parithosh Jayanthi, Ethereum Foundation developer
Mainnet shadow fork was a success! The blocks are finalizing, and everything looks solid on the execution clients. Congrats to all the hard-working teams! 🎉 pic.twitter.com/CMgAUlNsN8
Zipmex, one of the major established and regulated Australian digital asset exchanges, has recently launched a new product offering in Australia called ZipUp which offers attractive crypto yield returns.
Along with your regular cryptocurrency buying and selling, with Zipmex you can now use a “ZipUp” crypto staking account that gives daily rewards on your crypto. One of the attractive features of this account is having the flexibility of being able to withdraw and deposit any amount, anytime – with no lock-in period.
There's never been a better time to transfer your Crypto to @Zipmexaustralia to start earning daily #Yield.
We now have the most competitive rates in Australia and it's all via flexible staking with no lock ups.
Following December’s successful launch of its “ZLaunch” token reward program, Zipmex is now offering users interest rates of up to 10 percent on some digital assets on its ZipUp+ program.
ZipUp+ allows users to enjoy daily crypto bonuses on Bitcoin (BTC), Zipmex Token (ZMT), Ethereum (ETH), US Dollar Coin (USDC), Tether Coin (USDT), and Litecoin (LTC). The rewards are calculated based on the user’s VIP level, and higher rates are on offer for those who lock up their Zipmex Tokens (ZMT).
The full rewards table is outlined below and available on Zipmex’s website.
Zipmex earning schedules by VIP Levels. Source: Zipmex
Given that banks are currently offering little interest on savings accounts, the demand for interest on crypto is high, despite some crypto exchanges dropping interest rates.
What makes Zipmex+ attractive to users in search of a yield is that there is no minimum deposit amount and no lock-in period. Through Zipmex’s easy-to-use app interface, users can withdraw, trade or deposit anytime while enjoying daily crypto rewards.
Users interested in earning daily rewards on their crypto can sign up and get A$20 free in ZMT and then start staking their crypto to earn daily rewards.
About Zipmex
Zipmex is a trusted AUSTRAC-registered exchange with millions of users across Australia and Asia who enjoy 24/7 customer support, and instant trades, withdrawals and deposits.
With transaction fees as low as 0.1 percent per transaction, the platform is well suited for traders and HODLers alike.
The company is also duly registered with Blockchain Australia and backed by subsidiaries of the Mitsubishi Financial Group, a leading global financial services group and one of the largest banking institutions in Japan.
Announced on March 26, the cut – the platform’s second this month – reduces flexible returns offered by Crypto.com on popular tokens such as Bitcoin and Ethereum to 0.5 percent from between 1.5 – 2 percent. Returns on larger amounts, particularly stablecoins, have effectively been halved to 4 percent.
The promotional face of Crypto.com, actor Matt Damon.
Crypto.com said the new rates would apply immediately, and that pre-existing deposits will not be affected. In an announcement earlier this month, the platform said its planned rate cuts would come into effect from April 4. This latest interest cut also makes returns offered by Crypto.com lower than those on other major platforms, including Celsius and BlockFi.
Backlash Swift and Considered
Users took to social media to protest the cut, especially as it came without warning. Reddit user u/wyzard135 summed up the overall reactive mood of investors with the following post:
“The backlash [Crypto.com] is facing is well-deserved. Even though its rate cut in this market condition […] is understandable, some transparency and communication [would] go a long way.
“However, can’t help but notice this is exactly what banks do; the past couple of years their interest rates have been plummeting and there’s practically no communication to customers about it. Customers will only see their interest paying continuously shrink, and will have to manually look up interest rates, only to see [them] keep falling.
It pains me to see Crypto.com stooping to this behaviour and I fear not only crypto.com but other crypto exchanges will start behaving like banks, which ironically crypto is trying to replace, once they get big enough with unchecked power.
Reddit user u/wyzard135
Stablecoin Staking Reduced from 12% to 8% on Three-Month Term
The move has also spilled over into the DeFi space, with returns on stablecoin deposits falling to around 12 percent across most platforms, after initially being as high as 20 percent. Some platforms are only offering 8 percent on a three-month term.
Crypto News Australia has published a list of the 10 best crypto staking websites to earn daily returns. At the top of the list is Zipmex Australia, and a guide to investing on the platform can be accessed here.
A crypto collateral loan is perhaps one of the newest loan types to hit the peer-to-peer crypto lending scene. Emerging cryptocurrency loans services allow any crypto holders to become either the borrower or the lender, offering you the opportunity to bring utility to dormant funds or wallets.
Crypto loans Australia do not operate identically to bank loans; rather, these loans can be carried out through a blockchain platform. Essentially, the borrower offers their crypto as collateral for a loan, which the lender will then deposit to provide the loan funds.
Many of the available marketplaces for these transactions permit borrowers and lenders to search through each other’s offers for the best deals. Using crypto as collateral allows lenders to offer low loan to value ratios (LTVs); therefore, there will be plenty of collateral in circulation even if the market were to fall.
We have compiled a list of the top 10 crypto collateral loan services in Australia, to help you identify some of the best options in circulation.
FiFit describes its service as ‘crypto-backed business solutions’. This company is looking to work with businesses that seek access to extra cash without selling off their assets. FiFit’s process involves validating the company profile and cash requirements against their lending criteria and then providing a secure address for your crypto transfer.
To qualify, you will need to be an active Australian registered company with appropriate bitcoin backed assets. If you qualify, applications can be placed online 24/7.
Oasis is a lending platform that is willing to trade with multiple cryptocurrencies. However, the notable aspect of Oasis is its use of Dai. Dai is described as a ‘smarter digital currency for everyone’. As its value consistently tracks that of the US dollar, Dai claims to be less volatile than other digital currencies on the market.
The Dai wallet operates on the Ethereum blockchain. To complete transactions, you will require ‘gas’, which is an ETH fee – this fee is sent to the miners who maintain the Ethereum blockchain.
There’s no better way to describe Compound than how it describes itself. Compound is an ‘algorithmic, autonomous interest rate protocol’ designed to enable developers to access a plethora of financial applications. Compound is managed by a decentralised community of people in possession of $COMP tokens. It allows you to borrow from many digital currencies, including Ether and Dai.
On the Compound website you can see the market overview, including the top-performing currencies. You can also view the total supply volume and the total borrow volume. When you borrow or lend, you are contributing to the ‘liquidity pool’ rather than borrowing or lending to an individual.
Aave’s liquidity protocol has a similar feel to that of Compound. Described as being open-source and non-custodial, Aave allows its users to earn interest on their deposits and borrowing assets. You can borrow from a handful of digital assets, whether they are stablecoins or altcoins. Putting your assets into the liquidity pool allows users to earn a form of passive income from the repaid interest.
The interest rate on an asset that is in low supply is likely to be higher than that of more readily available assets. To borrow, the collateral you put down in exchange must be of an equivalent loan amount.
If you’re looking for a creative take on a crypto collateral loan, Alchemix has a fantasy-type feel to its platform. The trailer for this lender has a very magical vibe, as do the services it is offering. Alchemix is bringing you the opportunity to spend and save simultaneously, as these loans ‘repay themselves’ over time.
Alchemix has big plans for progression, so much so that one of its eventual plans is to create a recipe book for new users. This should outline various yield strategies that vary by risk to ensure a smooth path to generating good returns.
Binance is already a big name in the crypto world, and it is continuing to thrive in the field of crypto loans. Providing you are a registered Binance user, you can start borrowing. The loan terms are measured in days, ranging from a seven-day turnaround to 180 days. However, as interest is calculated on the hours you borrow for, paying in advance could be beneficial.
Binance Loans supports several collateral options; however, what you can borrow and what you can use as collateral may vary, so ensure you check the full list.
Nebeus is helping you use your crypto to fund daily expenses for more costly ventures, rather than requiring you to sell your assets for more money. Helping you to ‘bridge your crypto and your cash’, Nebeus lets you go beyond just loans. The platform also offers services such as cryptocurrency insurance, a crypto exchange, and crypto renting.
The crypto you put down for a loan can be insured by a $100 million policy, meaning you can have peace of mind that your deposit is safe. Alternatively, you can rent your crypto to the service and earn passive income from this.
Helio is the lending service boasting the widest array of deposit options and loan structures on the market. Helping you to shop around for the loan that will fit you best, Helio has some unique points of interest. One of these is crypto solutions to home ownership, meaning if you’d like to put crypto down as a house deposit, you can.
Helio is also offering the potential to use real-estate NFTs as loan collateral. There are a variety of options available and, at the end of the day, you will still own any crypto you put down as collateral.
When it comes to crypto loans Australia, Bitcoin Dealers can help you leverage your crypto for a loan that meets your needs. Despite having Bitcoin in their name, these guys will buy and sell with a handful of the major cryptocurrencies. Another cool aspect of this company is that you get the option to get off the computer and visit them in-branch if you wish.
Bitcoin Dealers will only lend to companies or sole traders. However, if you are an individual looking to sell your crypto, you can bring it to these guys in exchange for cash.
For approval within 24 hours and the quick transfer of funds, you may want to investigate Matias Group. Not only are its services claimed to be fast, it also has a particularly handy tool on its site – a loan calculator. To use this tool, you’ll simply need to input the amount you’d like to borrow, your loan term, and the currency you’ll be using as your asset.
From there, the calculator will tell you your LTV and the amount of your digital asset you will need to provide. It will also provide some rough estimates for your monthly and total interest, helping to highlight exactly what you can expect from your loan.
Conclusion
There are several pros and cons when considering a crypto collateral loan you should consider, there are very few strings attached, they often don’t require a credit check, and can grant fast access to cash. However, crypto-backed loans also can be more volatile, some offer poor rates for borrowers compared to traditional finance options, you might get margin called, and there might be a higher risk of encountering a scam.
Crypto loans Australia generally allow you to take the role of the lender as well as borrower. You can then take advantage of placing your crypto into staking liquidity pools to generate yield income.
Engagement with any aspects of the new DeFi industry has risks associated and thorough research must be done before even considering to participate in this space. This list is meant as a starting point down the path of introducing you to options for crypto collateral loans within Australia.
Upstart NFT platform LooksRare launched this week in the hope of providing an alternative to OpenSea. The project is built around the LOOKS token, which is being granted to big NFT spenders.
— LooksRare 👀💎 – NFT Marketplace (@LooksRareNFT) January 10, 2022
The LooksRare platform went live on January 10 as more and more marketplaces come together to try to take on the current market leader of NFT platforms. OpenSea saw massive growth in 2021, upping its value by 880 percent from 2020 following its latest fundraising round.
Launched by two pseudonymous co-founders, Zodd and Guts, LooksRare claims to be a community-focused marketplace that aims to develop new features based on what its users want. According to a blog post by the marketplace, it indexes all NFTs that exist on the Ethereum blockchain so they can be traded right away. Offers can already be made on the NFTs. LooksRare also allows its users to buy and sell NFTs with ether or wrapped ether, or a mix of both.
Vampire Attack on OpenSea
Source: stockhead.com.au
LooksRare is built around its newly launched LOOKS token, which it is now using to reward users of the platform and attract existing users from OpenSea, in a practice known in the crypto world as a “vampire attack”. LOOKS is currently being exchanged on Uniswap and hit an all-time high of US$4.71 before dropping to its current price of US$3.49, according to data from CoinGecko.
In the past 24 hours, the price of LOOKS is up 56.5 percent.
The Marketplace That Rewards Big Spenders
With the help of its LOOKS token, the new marketplace is hoping to attract NFT big spenders who have already used OpenSea by allowing them to claim LOOKS tokens for free. According to LooksRare, anyone who traded more than three ETH (US$9,400) on OpenSea between June 16 and December 16, 2021, can claim a portion of the tokens.
The vampire attack takes a similar approach to last week’s SOS airdrop from OpenDAO. The airdrop allowed users who have spent money on OpenSea to claim the Ethereum token SOS, as determined by the amount spent on the marketplace.
When users buy and sell NFTs from eligible collections, they will also receive LOOKS tokens. LooksRare additionally charges a 2 percent fee on all trades, which is then handed on to those staking LOOKS tokens.
As it stands, the platform is offering a jaw-dropping 649 percent APR to those who stake LOOKS.
