Enter the Zuckerverse
Enter the Zuckerverse
The top 5 most interesting stories in crypto...and more
Headline Roundup
1. Mark Zuckerberg gave a sneak peek of his Metaverse
2. Galaxy Digital terminates $1.25B acquisition of BitGo
3. Golden Bored Ape Sells for $1.5 Million USD
4. Bored Ape’s Getting Liquidated on BendDAO
5. Fed Instructs Banks To Report Crypto Activity
1. Mark Zuckerberg gave a sneak peek of his Metaverse
Horizon Worlds is a free online game you can play on Meta’s Oculus VR headset. This week CEO of Meta announced the game would be expanding into France and Spain as part of the company’s metaverse expansion. In 2021, Facebook underwent a big shift as it changed its name to “Meta” and spent around $10 Billion USD on metaverse-related projects. Mark and Meta clearly think the future will be one based in virtual reality but for all of our sakes, If this is what they can make with $10 Billion, I hope they start spending a bit more.
2. Galaxy Digital terminates $1.25B acquisition of BitGo
Galaxy Digital is a blockchain financial services company, that aims to help companies either get into crypto or use it in their businesses. BitGo is a digital asset custodian - a company that safeguards crypto assets on behalf of clients.
In May 2021, Galaxy Digital agreed to acquire BitGo for a record $1.25 Billion USD, this would have been the largest crypto acquisition ever and the first over $1 Billion USD. Galaxy was purchasing BitGo with the aim of boosting its institutional offering. However, this week the deal fell apart as Galaxy claims that BitGo were unable to provide their 2021 audited financial statements on time, for some reason this was a deal breaker. This is where things get messy as BitGo claims they did in fact hold up their end of the deal and provided all the necessary documents for the deal to proceed. Galaxy is now trying to walk away from the deal without paying the $100 Million breakup fee, while BitGo builds a lawsuit against them.
3. Golden Bored Ape Sells for $1.5 Million USD
On the 1st of May 2022, the floor for a single Bored Ape Yacht Club Ape was 153 Ethereum (around $400,000 at the time). The current floor is just 67 Ethereum ($108,000). Despite the poor market across the board, this week BAYC #5383 sold for a whopping 777 ETH ($1.5 Million USD), the seller made a handsome $1 Million in just over a year having bought it for 95 ETH.
Another notable NFT sale this week is that of the left-facing pudgy penguin. The left-facing pudy is the rarest in the Pudgy Penguin collection (totalling 8,888 pengs)
That guy sold for a staggering 400 ETH ($640K USD), which is over 100x times the floor price of Pudgy Penguins. In the past two weeks the floor price of the Pudgy’s has gone up 83% - it recently announced 9 new additions to its advisory board, including the CEO of Nansen, Hasbro’s head of licensing and Jordan Sterling from Meta’s (Facebook) partnership team.
4. Bored Ape’s Getting Liquidated on BendDAO
BendDao is an NFT lending platform, where people can deposit ETH and earn a percentage return. On the other end, people borrow ETH and put up their NFTs as collateral (while also paying an interest rate). Once again this is a case of risky assets (NFTs) used as collateral for borrowing other risky assets (ETH).
When someone deposits an NFT into BendDAO, they can borrow up to 40% of that collection’s floor price in ETH. For example, with Bored Ape Yacht Club’s floor price currently around 67.89 ETH, Bored Ape owners can borrow up to 27.1 ETH.
If the floor price of the collateral falls to a certain price (the NFTs) get put up for auction, where the bids need to be greater than the debt and worth at least 95% of the floor price of the NFT. The owner of the NFT has just 48 hours to repay the full loan or face liquidation. Lots of high-profile blue-chip NFTs (bored apes, mutant apes, CloneX, Doodles) are at risk of liquidation due to a sluggish NFT market.
We are potentially looking at what is known as a liquidation cascade. This is where the NFTs are sold, lowering the floor price, leading to more NFTs hitting their liquidation threshold and the cycle repeating until buyers step in. Currently, 2.8% of all Bored Apes are being used as collateral on BendDao. While that might not sound like a lot, in a market where only 2-5 apes are traded per day, having over 50 on the platform at risk of liquidation could have some big ripple effects on the NFT market.
5. Fed Instructs Banks To Report Crypto Activity
The Federal Reserve is the central bank in the United States, the central bank implements a government’s monetary policy and the mechanics behind issuing its national currency (in this case the USD). The Federal Reserve appears to be taking a closer look into crypto activities and has issued a letter instructing regulated banks in the US to report any crypto-related activities back up the chain. It also wants to be kept in the loop if these banks decide to begin any crypto activities of their own.
You might have noticed that recently banks like JP Morgan, BlackRock have all dipped their toes into the crypto waters, but the fed is sceptical. It believes crypto can be used for “illicit financing” and money laundering. After last week’s sanctioning of Tornado Cash, its clear that after the wave of activity in 2021, regulators are paying attention and many of them are not liking what they have seen.
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