Demand for virtual land crashes Ethereum network
WHAT'S MOVING CRYPTO
Happy Friday Everyone! 👋
We finally got an explanation for why Solana went dark for 7 hours last weekend: bots tied to a new NFT project built on the blockchain swarmed the network. Hopefully, once they’re done with that they can Fix Twitter bots next! Over in the EU, a top finance official called for a “global agreement on crypto”. The goal is to protect investors and limit the environmental impact of mining. Finally, Elon took a break from doing everything to change his Twitter profile pic to a collage of BAYC NFTs and presumably troll Ape Holders by tweeting, “I dunno…seems kinda fungible”. The floor price for the collection surged by 10 ETH.
Having said that…let’s get to it!
Demand for virtual land crashes Ethereum network
A Wall Street first
Cash-hungry miners get creative
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1. Demand for virtual land crashes Ethereum network
Bored Ape Yacht Club (BAYC) creator Yuga Labs raised ~$320M worth of ApeCoin in a sale of virtual land for its highly anticipated Otherside metaverse project—the latest extension of the BAYC franchise.
Sounds like a hit, right? Not quite.
The sale triggered one of the highest spikes in Ethereum transaction fees ever which left buyers paying more in minting costs than the price of the digital parcels, called “Otherdeeds”, themselves.
After facing backlash from investors for the chaotic debut, Yuga has refunded gas fees to anyone whose transaction failed due to the network overload caused by the sale.
Buyers at launch paid $5,800 per Otherdeed plus as much as $6,000 in gas fees for a total of ~4.21 ETH.
The current floor price is 3.85 ETH, but bids for the NFTs are much lower.
2. A Wall Street first
In a first for big Wall Street banks, Goldman Sachs has issued a Bitcoin-backed loan to crypto exchange Coinbase.
While we don’t know the amount of the loan, but we know that Coinbase held ~$170M in Bitcoin at the time of writing.
The Wall Street giant’s recognition of Bitcoin as collateral implies belief and confidence in the future of cryptocurrencies, and the move is meant to strengthen ties between TradFi and crypto.
According to Arca, it’s likely that Goldman—who traded its first over-the-counter Bitcoin options in March—is testing the waters for this type of transaction as a result of heavy demand.
While these loans aren’t new, they are new to Wall Street which makes Goldman a pioneer of sorts.
Other banks aren’t far behind though, with Jeffries, BlackRock, and Cowen (among others) all actively exploring new crypto offerings.
3. Cash-hungry miners get creative
With markets on shaky footing, access to capital for miners has been limited.
Last month marked the second consecutive month Bitcoin miner Riot Blockchain sold some of its BTC holdings to raise money for operations and expansion plans.
Fellow miner Marathon Digital said this week it too was considering selling off some of its holdings to help reach its growth objectives for the year.
But they’re also tapping another source to generate income: call options.
Rather than selling their Bitcoin, some miners are selling call options in their own version of “yield farming”.
Bitcoin’s relatively low volatility over the past several months makes the job of option sellers easier as it reduces the chance that strike prices get hit.
The risk arises, however, when the market starts trending up and strike prices are reached.
For cash-hungry miners, the name of the game here is to raise money as efficiently as possible to fund growth while selling off as little of the very asset the business is centered around.
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