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1. “Kimchi Premium” returns

The Facts:

  • The “Kimchi premium” is the price of Bitcoin in South Korea, denominated in Korean Won (KRW), versus an index of BTCUSD prices on Western exchanges.
  • This premium has increased significantly since mid-March and reached 15% recently.
  • Following a statement by the South Korean Financial Services Commission regarding stricter controls of illegal activities, the premium decreased sharply.

 

Why it’s important:

  • A return of the Kimchi premium signals strong interest in Bitcoin from the South Korean market. During the heights of the 2017 bull run, this premium reached more than 50%.
  • Arbitrage between South Korean and Western exchanges is difficult due to restricted capital flows out of South Korea, leading to inefficient markets during periods of high demand.
S01E09_KimchiPremium
Source: tradingview.com

2. Coinbase holds earnings call

The Facts:

  • Ahead of the direct listing of its shares on the Nasdaq exchange on April 14, Coinbase held an earnings call and presented its latest financials.
  • Coinbase generated $1.8 billion in revenue in Q1 2021 and close to $800 million in net income.
  • They disclosed to have $223 billion of assets on their platform, roughly half of which is from institutions, belonging to 56 million verified customers.

 

Why it’s important:

  • The direct listing of Coinbase’s shares is highly anticipated – in secondary pre-listing markets, shares trade close to $500, implying a market cap of more than $100 billion.
  • The Coinbase IPO will be the first time a crypto exchange is given a confirmed valuation by the open market. This, in turn, might impact the price discovery of centralized exchange tokens like BNB, as well as governance tokens of decentralized exchanges, such as UNI.
  • Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.
    GettyImages-500445690jpg
    Vitalik Buterin

3. Asia ramps up CBDC efforts

The Facts:

  • Japan will conduct pilot experiments for issuance, distribution and redemption of its central bank digital currency (CBDC) until March 2022.
  • China has announced that it will distribute and promote its digital yuan in the province of Hainan.
  • Thailand will test its retail CBDC in the second quarter of 2022, anticipating that “digital currencies will play a greater role in Thailand’s s future financial landscape.”

 

Why it’s important:

  • CBDCs are currently being researched by every major central bank around the globe and potential implementations tested.
  • China seems to take a pioneering role and to be closest to an actual launch, whereas most other CBDCs are still in early stages of development.
  • Potential interoperability between CBDCs and public blockchains could mark an important step towards the modernization of financial infrastructure.
  • Number of the Week
    USD 2 trillion
    Total crypto market cap surpassed it on April 6 • Total futures trading volume in March

4. Fei protocol genesis attracts 639’000 ETH

The Facts:

  • Algorithmic stablecoin protocol Fei has launched, collecting 639k ETH ($1.3 billion) to serve as collateral for backing the stablecoin FEI.
  • FEI is supposed to hold a 1:1 peg to the USD. Sellers below the peg are punished with an additional, incremental “burn” mechanism.
  • Contributors received TRIBE, the governance token of the Fei protocol.

 

Why it’s important:

  • After its multi-billion dollar launch, the ETH-FEI pair on Uniswap instantly became the largest liquidity pool at $2.6 billion.
  • During its first days of trading, FEI slipped below its peg and currently trades around $0.78. Due to the additional penalty of selling below the peg, FEI holders are essentially trapped until the peg is re-established – the timeline for which is still unclear.

 

5. Ripple Labs wins discovery motion

The Facts:

  • Ripple Labs, Inc. was sued by the SEC for conducting the unregistered offering of securities in December 2020.
  • In their ongoing lawsuit, Ripple won a discovery motion to gain insight into the SEC’s internal communications regarding the classification status of Bitcoin, Ether and XRP as securities.
  • Meeting minutes and internal memos will be part of the order, however internal staff e-mails will not.

 

Why it’s important:

  • The lawsuit of the SEC against Ripple has led to cautionary delistings by various exchanges, as well as removal from large cap cryptocurrency index funds.
  • While this discovery motion may have an impact on this lawsuit, the SEC’s internal communication documents might also reveal how they assess whether a cryptocurrency should be treated as a security or not, and what framework is applied to evaluate this.

In other news

  • dYdX’s Layer 2 perpetuals go live on Ethereum scaling solution StarkWare (via The Block)
  • Decentralized lending protocol Liquity launches on Ethereum (via The Block)
  • Riot Blockchain purchases 42,000 Antminers from Bitmain (via Cointelegraph)