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Coinbase’s stock price has been on a tear since BlackRock’s surprise spot bitcoin ETF filing, but the enthusiasm underpinning the rally may be short lived, according to one analyst who covers the company. 

The company’s stock has appreciated from around $52 per share on June 15 to $71 per share at the time of writing, paring all losses since the US Securities and Exchange Commission announced its lawsuit against the exchange earlier this month. 

The rally is underpinned by a broader comeback in the crypto market kicked off by a flurry of ETF filings from companies ranging from asset management firm WisdomTree to crypto-native firms like Bitwise. 

Still, Berenberg Capital Markets’ Mark Palmer said in a note to clients that the enthusiasm around COIN “may prove short-lived.”

The analyst, who has a hold rating for the stock with a $39 price target, said “investors looking at COIN as a play on increasing engagement by institutions with the digital asset ecosystem should first consider the risks the company is facing that could give rise to negative headlines in the near future that would trigger a reversal of the stock’s recent gains.”

Coinbase’s staking rewards program

Berenberg pointed to the likelihood of decreased revenues from a potential cease and desist orders on Coinbase’s staking rewards program. Coinbase is up against as July 4 deadline across several jurisdictions in the US to mollify regulatory concerns around its staking program. 

In Palmer’s view, the downside risk of staking revenue losses is larger than the upside of Coinbase’s partnership with BlackRock. 

The analysis, however, does not consider the breadth of Coinbase’s ETF relationships. The firm is playing a key role in the ETF race, participating in surveillance sharing agreements as well as custody relationships for several issuers on their funds, according to sources at the firm. It will also serve as a custody provider for BlackRock’s fund. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

This will be the popular DEX’s fourth blockchain after Ethereum, Aptos and BNB Chain.

The cumulative volume of on-chain trading and swaps on the StarkEx Layer 2 network has surpassed $1 trillion across different apps since its launch in June 2020, reported StarkEx’s developer StarkWare.

The trading volume on StarkEx, the largest in the Ethereum Layer 2 niche, has been driven by the crypto derivatives trading exchange dYdX. Other apps, including ImmutableX, Sorare, and Rhino, have also contributed substantially to the cumulative volume on StarkEx, the team noted.

StarkEx is a Ethereum Layer 2 solution that aggregates transactions from Ethereum’s mainnet to reduce congestion and transaction fees. It leverages a zero-knowledge rollup technology called “Starks” to increase Ethereum’s efficiency without undermining its security.

StarkWare runs StarkEx

Blockchain scaling and development firm StarkWare operates StarkEx as a SaaS solution to help Ethereum projects scale. It also contributes to StarkNet, a separate Ethereum Layer 2 project.

“We’ve built infrastructure that supports the most sophisticated user-friendly blockchain apps,” Uri Kolodny, co-founder and CEO of StarkWare, told The Block, reflecting on the $1 trillion cumulative volume milestone.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Financial Services and Markets Act 2023 classifies crypto as a regulated financial activity.

Coinbase, which gate-crashed the offshore crypto derivatives market in May, is already clocking in about $100 million in volumes on a daily basis, according to data compiled by The Block. 

Over the period of June 21 to June 28, the exchange clocked in nearly $900 million in trading volumes. Sources at the firm tell The Block that the market reception has been positive and volumes are strong for a venue with only two contracts to trade.

The firm, which is being sued by the US Securities and Exchange Commission, said in May that it would enable international users to trade perpetual futures tied to bitcoin and ether through a new platform based in Bermuda. Volumes came in at $73 million on Wednesday — the lowest level over the past eight days. During that period the firm saw $892 million worth of crypto derivatives traded. 

“Coinbase International Exchange is off to a strong start since launching in early May,” noted Emmanuel Goh, product manager at Coinbase and former Skew CEO, in an email to The Block. 

“We are working to bring new features and additional products to market over the second part of the year and continue growing our market share,” he added

Binance is still the runaway leader in derivatives trading with $444 billion traded on its venue this month, according to The Block’s data dashboard. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

DeFi protocol AlloyX launched a real-world asset vault after a $2 million pre-seed funding round led by Hack VC.

The round also included investment from Circle Ventures, Digital Currency Group, Stratos, Lecca Ventures, MH Ventures, very early Ventures, Archblock, dao5 and Credix Finance, according to a statement.

The project has partnered with the decentralized credit marketplace Credix Finance to create the vault, tapping into a private credit market on DeFi worth over $534 million in active loans, according to the analytics dashboard rwa.xyz.

AlloyX’s vault combines overcollateralized tokenized credit (digital tokens backed by real-world assets like loans or debt instruments) from Credix Finance with a smart contract for tokenized U.S. Treasury bills.

Real-world asset liquidity

The vault aims to open up access to real-world asset liquidity for protocols, decentralized autonomous organizations and institutional investors in the DeFi space, offering diversification beyond existing crypto-based lending and liquidity provision opportunities. Users can create customized strategies that blend tokenized U.S. Treasury bills with a range of real-world assets to balance their yield and risk appetite in the first DeFi vault of its kind, AlloyX claimed.

AlloyX CEO Alexandre Liege highlighted a need for DeFi’s composability and flexibility in real-world assets, referencing the 2022 crypto market crash.

“As we saw during the crypto market crash in 2022, investors wanted to exit positions from real-world lending pools. But it was hard to get out of these real-world loans with years left before maturity,” Liege said in the statement. “The composability and flexibility that make DeFi valuable need to be available for real-world assets as well. To achieve this, we are building products to enable our community to invest and create real-world asset diversified baskets with automatic reinvestment, similar to what Yearn Finance created for digital assets.”

Demand from DAOs

“We’ve seen demand from DAOs eager to allocate capital in the real-world assets space but are looking for flexible and liquid options that would work for them,” added Credix Finance co-founder and Chief Growth Officer Chaim Finizola. “We’re excited to see the AlloyX team launch the vault to give investors exposure to private credit while benefiting from the liquidity of U.S. T-Bills.” 

The AlloyX team says it’s reached $5 million in total value locked and generated average yields of over 18% for assets held on the platform since its inception in 2021. AlloyX currently has nine integrated credit protocols, according to its website.

AlloyX’s first real-world assets vault is set to go live in early Q3, with plans to integrate with additional DeFi protocols and launch more investment vaults later this year.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The government should recognize blockchain as an emerging industry with “significant” long-term economic and job creation opportunities, a lawmaker committee on industry and tech said.

Fintech startup Six Clovers launched the Versal Network on the Sui blockchain. It’s designed to enable faster, more cost-effective and secure cross-border payments.

Combining blockchain technology with existing fiat infrastructure, the Six Clovers API allows organizations to integrate the Versal Network into their technology stacks, enabling real-time payments in stablecoins and Central Bank Digital Currencies, according to a statement.

Six Clovers was founded by PayPal veterans in 2021 with venture investment from Borderless Capital, BCW Group and Grupo Supervielle. Sui, a Layer 1 blockchain developed by Mysten Labs, utilizes the Move programming language originally developed at Facebook to power its abandoned Diem cryptocurrency project.

Versal aims to close the gap between established web2 and web3 commerce by “abstracting the blockchain and making the infrastructure invisible to customers,” Six Clovers co-founder and CEO Jim Nguyen said in the statement. “We’re accelerating the time to market for enterprises to build efficient and easy-to-use payments and digital asset applications.”

SWIFT similarities

“Sui offers an infinite scalability that is perfectly suited for the next-gen web3 payment network that Six Clovers has built,” Sui Foundation Managing Director Greg Siourounis added. “The tooling Six Clovers has created empowers every enterprise building on Sui to seamlessly integrate blockchain-native payments into their enterprise applications.”

Similar to the SWIFT network’s payment rails in traditional finance, Versal aims to provide a more modern, 24/7 payment infrastructure without the inefficiency of multiple intermediaries and lengthy settlement times while maintaining regulatory compliance and transaction privacy, Six Clovers said.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Versal Network will allow companies to transact in stablecoins and central bank digital currencies.