Tag: Interest

ADDX Introduces Cash Management Tool ADDX Earn

by Blockchain News

ADDX has introduced a cash management tool for investors, which consists of a solution that aims to withstand short-term volatility while preserving capital.

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The new ADDX Earn will provide one more option to investors with excess funds in their wallets to make interest, instead of their funds sitting idle, according to the statement.

Per the private market exchange company, ADDX Earn has been built to boost investors’ returns deposited in their ADDX wallets and has not yet decided on which private market product to take part in. It added that some of the idle capital may also have come from previous investment earnings on ADDX.

The plan of the new management tool is also to beat short-term bank deposit rates by providing higher target returns for products under ADDX Earn. Many investors usually store undeployed capital in short-term bank deposit rates.

“The first two funds to be launched under the ADDX Earn umbrella are by Lion Global Investors, a fund manager that is a part of the OCBC Group,” ADDX said.

The two funds named the LionGlobaI SGD Enhanced Liquidity Fund and LionGlobaI USD Enhanced Liquidity Fund, are diversified over a range of issuers and tenors through investments in high-quality portfolios of debt instruments.

‘The two funds have weighted average portfolio durations of less than a year, which gives Lion Global the flexibility to adjust portfolio allocations in response to changing interest rates and market conditions,” ADDX said.

According to ADDX, investments can be redeemed on a weekly basis.

The funds are also targeting low-volatility assets. These are being done as they are “well-suited” for the current market environment that has seen increased volatility in other asset classes, ADDX announced.

Interest is accrued daily for both funds. As of July 31, the LionGlobaI SGD Enhanced Liquidity Fund had a weighted average yield to maturity of 2.22% p.a., while that of the LionGlobaI USD Enhanced Liquidity Fund was 2.38% p.a. These rates change monthly depending on the prevailing interest rate environment and the underlying assets held by the funds.

Gerard Lee, Chief Executive Officer of Lion Global Investors, said, “our liquidity funds are typically used by financial advisers and digital players. We are therefore delighted to have a private market exchange use our liquidity funds to provide a solution for their investors’ excess cash.”

The SGX-backed ADDX was founded in 2017. It is currently serving individual investors from 39 countries across the Asia Pacific, Europe and the Americas – except the US.

The company has started using blockchain and smart contract technology to reduce manual interventions in issuing, custody and distributing private market products.

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Low-Risk Appetite Continues to Play Out in Bitcoin Market Based on Diminishing Institutional Activity

by Blockchain News

Institutional activity remains sluggish as bitcoin hovers around the lower $20K level, depicting a low-risk appetite.

On-chain analyst Caue Oliveira pointed out:

“Low institutional activity evidences de-risking movement by traditional whales. Looking at the daily trading volume in mutual funds traded in the traditional market with direct/indirect exposure to BTC, we can see the current low-risk appetite.”

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Source:CryptoQuant/CaueOliveira

 

Institutional investment has played an instrumental role in enabling Bitcoin to hit all-time highs (ATHs). For instance, BTC breached the then-historic highs of $20K in December 2020 after failing to do so for three years as more institutional investors joined the network.

 

Furthermore, institutional investments enabled the leading cryptocurrency to record the latest ATH of $69,000 in November last year.

 

Nevertheless, retail investors continue jumping on the Bitcoin bandwagon based on the rise of non-zero BTC addresses. Market insight provider Glassnode stated:

“The number of BTC addresses holding 0.01+ Coins just reached an ATH of 10,560,930. Previous ATH of 10,560,117 was observed on 26 July 2022.”

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Source:Glassnode

 

Despite the back and forth being experienced in the BTC market, long-term objectives continue to take shape. 

 

Through its weekly report dubbed “Conviction Through Confluence,” Glassnode highlighted:

“Long-term supply dynamics continue to improve, as redistribution takes place, gradually moving coins towards the hodlers. Notable supply concentrations are observable at $20K, $30K, and $40K, which tend to align with both technical and on-chain price models, making these regions significant zones of interest.”

Bitcoin was hovering around $21,392 during intraday trading, according to CoinMarketCap. With the looming interest rate review by the Federal Reserve (Fed) slated for July 27, it remains to be seen how the top cryptocurrency plays out in the short term. 

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Anchor protocol’s reserves head toward depletion due to lack of borrowing demand

by Cointelegraph

Anchor, the flagship savings protocol of the Terra Luna (LUNA) ecosystem, has seen its reserves decline by 35.7% in the past seven days according to Terra.Engineer. Since the beginning of December, the amount of Terra USD Stablecoin (UST) held in the “terra1tmnqgvg567ypvsvk6rwsga3srp7e3lg6u0elp8” smart contract has declined by over 50%, with only $35.7 million remaining.

As a savings protocol, users deposit their UST assets via their wallets and earn up to 20% yields as their principal is lent out to borrowers, who pay interest on the loan amount. Borrowers must deposit collateral to ensure the lender can get their money back in the event of a default. In addition, Anchor stakes the collateral it receives to generate rewards for depositors.

Whenever there is a deficiency between the income generated through borrowers’ interest, collateral staking, and the yield expenses paid out to depositors, Anchor must tap into the aforementioned UST reserves to make up for the difference. Last July, its creator Terraform Labs injected 70 million UST into the reserve protocol, and its value was relatively stable. But in the past 60 days, the total deposit amount has increased from $2.3 billion to $6.1 billion, while the total borrowed amount only increased from $1.2 billion to $1.5 billion.

In bear markets, investors typically flock out of volatile assets in search of stable ones, such as high-yield savings protocols. However, the growing discrepancy between Anchor’s deposits and borrowings has placed severe pressure on its reserves. If the trend were to continue, the reserve would run out in the coming months, and Terraform Labs would need to inject another round of UST for liquidity or sharply lower Anchor’s promised interest rate.