Tag: Lending

Aave to Launch on zkSync with Overwhelming Support from Community

by Blockchain News

The Aave community has spoken, and the results are in. A proposal to launch the decentralized exchange (DEX) Aave on the zkSync Era Mainnet has received overwhelming support, with over 99% of AAVE tokenholders casting ballots voting in favor of the move.

The proposal, which was first pitched on March 26, outlined plans to launch the third version of the lending and borrowing protocol on the zero-knowledge Ethereum Virtual Machine (zkEVM). The launch will initially be limited to USD Coin (USDC) and Ether (ETH).

The proposal’s success in the “temperature check” stage means that the next steps listed in the proposal will be pursued. This will involve further discussion, followed by risk parameter evaluation and the finalization of the proposal. If successful, the proposal will then be submitted for on-chain governance approval.

While only around 0.02% voted against the proposal, and a further 0.02% abstained from voting, the overwhelming support from the Aave community is a significant milestone for the project. Deploying on zkSync has the potential to introduce new users to decentralized finance, as well as cementing Aave’s position as a premier borrowing platform within the zero-knowledge ecosystem.

The Aave community previously voted to deploy the Aave V3 codebase on zkSync’s v2 Testnet, which was approved in another off-chain vote. With this latest vote, Aave is another step closer to deploying on the zkSync Era Mainnet.

Aave is not the only decentralized exchange looking to leverage the benefits of zkSync. Uniswap is also set to launch on the scaling solution from Polygon after a successful governance proposal was passed.

Aave’s journey to this point has not been without its challenges. In November 2022, the platform changed its governance procedures after it was hit by a $60 million short attack that ultimately failed. However, the project has emerged from this setback with renewed vigor and determination, as evidenced by the overwhelming support for its latest proposal.

Overall, the launch of Aave on zkSync has the potential to be a game-changer for the decentralized finance space, and it will be interesting to see how the project progresses in the coming months.

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Thailand SEC Considers Ban on Crypto Staking and Lending

by Blockchain News

The Thai SEC’s potential ban on crypto staking and lending activities is part of the country’s broader efforts to regulate its rapidly growing digital asset industry. The SEC has been actively working to establish clear guidelines for crypto businesses operating within Thailand’s borders.

In a statement released on March 8, the SEC announced that it is seeking public comments on a draft regulation that would prohibit VASPs from offering any type of staking or lending services. This move follows the regulator’s decision to postpone its implementation of a new licensing rule for VASPs until June 2021.

The proposed regulation would require VASPs to obtain permission from the SEC before offering any new services or expanding their existing offerings. This would give the SEC greater control over the types of services offered by VASPs operating within Thailand’s borders, ensuring that they comply with the country’s legal and regulatory framework.

The Thai SEC’s proposed ban on staking and lending services has sparked concern among some members of the country’s digital asset industry. Some industry experts believe that the ban could stifle innovation and growth in the industry, making it more difficult for VASPs to compete with their international counterparts.

Others, however, argue that the ban is necessary to protect investors from the risks associated with these types of services. Staking and lending involve the use of complex financial instruments that can be difficult for novice investors to understand, increasing the potential for fraud and other forms of misconduct.

Regardless of the outcome of the SEC’s public hearing, it is clear that Thailand’s regulators are taking a proactive approach to regulating the country’s digital asset industry. As the industry continues to evolve and grow, it is likely that we will see more regulatory measures put in place to protect investors and ensure the long-term stability of the market.

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Hodlnaut Seeks to Sell Business

by Blockchain News

According to recent reports, the struggling bitcoin lending company Hodlnaut is collaborating with a number of prospective buyers in an effort to sell its business as well as its other assets.

According to a story published by Bloomberg on February 6, a number of parties interested in acquiring Hodlnaut and its claims against the defunct cryptocurrency exchange FTX have shown interest in doing so.

After Hodlnaut filed for bankruptcy protection from its creditors, the company’s temporary judicial managers began receiving various acquisition offers for the company’s crypto business that is situated in Singapore. The report indicates, with reference to an affidavit, that the possible investors and the judicial managers are now in the process of signing non-disclosure agreements with one another.

According to what was allegedly stated in the affidavit, as of December 9, 2022, Hodlnaut Group owed a total of $160.3 million, which represented 62% of the company’s outstanding debt, to various businesses and organisations such as the Algorand Foundation, Samtrade Custodian, S.A.M. Fintech, and Jean-Marc Tremeaux.

According to information that was previously divulged, Hodlnaut’s FTX accounts had a total of 1,001 FTX (FTT) tokens, 514 Bitcoin (BTC), 1,395 Ether (ETH), 280,348 USD Coin (USDC) tokens, and so on. According to reports, the business has digital assets worth more than 18 million dollars listed on centralised exchanges such as FTX, Deribit, Binance, OKX, and Tokenize.

Hodlnaut, which had been a significant cryptocurrency lending platform in the past, was forced to cease operations in 2022 as a result of a shortage of liquidity brought on by a big bear market. Following the suspension of withdrawals in August, Hodlnaut successfully petitioned a Singapore court for protection from creditors, which enabled the company to reorganise itself while being overseen by the court. In their capacity as temporary judicial managers, the court chose Ee Meng Yen Angela and Aaron Loh Cheng Lee of EY Corporate Advisors.

The announcement comes several weeks after Hodlnaut’s creditors voted against a proposed restructuring plan and petitioned for the platform’s assets to be sold off in liquidation. Instead, it was stated that the creditors demanded a rapid liquidation and distribution of the assets that were still in existence among the creditors in order to maximise the value that was still there.

Users are able to deposit bitcoin, which is then loaned out to borrowers in exchange for monthly interest payments via Hodlnaut, one of the numerous organisations that specialises in providing services related to crypto lending. A number of crypto lending platforms, including Celsius Network, BlockFi, Genesis, and Vauld, have had operational difficulties as a result of the cryptocurrency winter of 2022. There are a lot of industry leaders who are of the opinion that crypto financing may still thrive despite the bear market; however, certain requirements must first be satisfied.

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Committee Appointed to Represent Unsecured Creditors in Genesis Global bankruptcy

by Blockchain News

According to documents filed with the court on February 4, a committee consisting of seven members has been constituted to represent the interests of unsecured creditors in the bankruptcy case involving Genesis Global.

The committee will act as the representatives of the creditors in court, and it will have the right to participate in the restructuring plan as well as the right to be consulted before to key decisions. In most cases, members are chosen at random from a list including the 20 biggest unsecured creditors.

Mirana Asset Management, which is a division of the cryptocurrency exchange Bybit, SOF International, Digital Finance Group, and the cryptocurrency exchange Bitvavo are some of the organisations that have been selected as members, along with three individual creditors: Amelia Alvarez, Richard Weston, and Teddy Andre Amadeo Goriss.

The United States Trustee is an executive branch institution under the Department of Justice that is responsible for managing bankruptcy proceedings. William Harrington, a spokesman for the United States Trustee, was the one who appointed the organisation. In the process of filing for bankruptcy, one of the most significant steps is to establish a committee of creditors.

Bitvavo is one of the largest creditors, having an exposure of more than $290 million; it is followed by Mirana, which has an exposure of $150 million, and Digital Finance Group, which has an exposure of $37 million.

On January 19, Genesis Capital, which includes Genesis Global Holdings and its lending business subsidiaries Genesis Global Capital and Genesis Asia Pacific, filed for bankruptcy, alleging potential liabilities of up to $10 billion.

Two months after discovering liquidity concerns as a result of the failure of the cryptocurrency exchange FTX, the firms filed protection under Chapter 11 of the Bankruptcy Code. Since November 16, 2022, the Genesis Global Capital platform has not allowed for any withdrawals to be processed.

On January 24, a group of creditors filed a securities class-action complaint against the Digital Currency Group, the parent company of Genesis, as well as its creator and CEO, Barry Silbert. The lawsuit alleges that the defendants violated federal securities laws.

In the case, it is alleged that Genesis engaged in securities fraud by concocting a plan to defraud prospective and current lenders of digital assets by making assertions that were false and deceptive. Plaintiffs believe that Genesis knowingly misrepresented its financial status, which they claim constitutes a violation of Section 10 of the United States Securities Exchange Act (b).

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Everlend Finance, a Solana-based decentralized finance

by Blockchain News

Everlend Finance, the company behind the Solana decentralised finance (DeFi) system, is winding down its business activities and requesting that users remove their cash from the network.

On February 1, the firm announced the decision through Twitter, explaining that while having “enough runway” to continue functioning, doing so would be a risk given the present state of the industry. In particular, Everland’s team made the following observations: “Unfortunately, there is not enough liquidity in the rn market, and this problem is not unique to Solana. Furthermore, the B/L market, which Everlend is completely reliant on, continues to contract. Under these circumstances, continuing would be gambling to do so. And despite the fact that there was plenty of runway left, we made the decision to halt here.”

Everlend also said that deposits from underlying protocols are now stored in vaults, and that the app would be limited to withdrawals only until the funds are completely cleared. “We urge that our customers remove their cash as soon as possible,” the company said.

The group has said that all monies, collected and utilised, together with payments made to third-party contractors, will be “covered” over the next two weeks. This indicates that all parties involved will be compensated in full for their contributions. The codebase of the protocol will also be made publicly available, enabling others to continue developing solutions based on it.

Everlend was established in 2021, and its strategic plan for the following months involved the introduction of both a governance platform and a money market. Everstake Capital, GSR, and Serum were among the investors in the protocol.

During the height of its popularity, DeFi Llama reports that Everlend had nearly $400,000 worth of total value locked (TVL). However, as a result of the collapse of FTX, the protocol had a considerable fall, which had an adverse effect on the liquidity of the market.

Everlend is the second Solana-based DeFi technology to go down within a few days due to crypto winter. Everlend was the second protocol to shut down. Friktion platform made the announcement that it will be shutting down its user interface on January 27. The company cited a “difficult market for DeFi expansion” as the reason for its decision.

The decision was made after Everlend reported over a year earlier that it had successfully completed a financing round in which it had received $5.5 million. Shortly before the FTX crash hit in November, the business even began offering undercollateralized loans with the intention of satisfying the demand for DeFi shown by institutional investors.

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The new procedures included the requirement that all future code changes be approved by the DAO

by Blockchain News

According to a tweet thread published on January 27 by the Aave team, the third edition of the cryptocurrency lending app Aave has now been deployed to Ethereum for the very first time. ” Aave V3 ” was first made available to the public in March 2022, and immediately after its launch, it was installed on a number of blockchains that were compatible with Ethereum Virtual Machine (EVM).

Users of Ethereum could only utilise the more outdated “V2” version of the application up until now.

Aave V3 has a number of features that are designed to assist users in reducing the amount of money spent on fees and increasing the effectiveness of their capital.

For instance, the High Efficiency option gives the borrower the opportunity to sidestep some of the app’s more severe risk requirements. This is possible in the event that the borrower’s collateral has a strong correlation with the asset that is being borrowed.

The developers believe that borrowers of stablecoins or holders of liquid staking derivatives may find this feature valuable.

In addition, the “isolation” feature enables some risky assets to be used as collateral, provided that they have their own debt cap and are only used to borrow stablecoins. This is possible since certain assets can only be used to borrow stablecoins.

In the prior iteration, there was no provision for putting restrictions on the kinds of assets that may be used as collateral for a loan of a certain kind.

Because of this, coins with a lesser market capitalization and less liquidity were often unable to be utilised as security.

The creators claim that the gas optimization algorithm that is included in V3 will result in a 20–25% reduction in the cost of gas.

In November of 2021, the code for V3 was made publically available.

In March of 2022, the Aave DAO gave its blessing to move forward with the deployment of the new version after an initial vote.

The V3 system was rolled out to Avalanche (AVAX), Arbitrum (ARB), Optimism (OP), and Polygon over the course of the subsequent few months (MATIC).

Despite this, the Ethereum implementation of Aave has traditionally been the most liquid, but V3 was not available on this implementation until recently.

The official proposal states that there will be a total of seven coins available during the launch phase.

The vote to launch was held beginning on January 23 and continuing for a total of two days.

Following the success of the proponents in the vote, the implementation of the idea was finally able to get off the ground on January 27.

The percentage of DAO members that cast a negative vote on the proposal was less than 0.01%.

Aave was subjected to a $60 million short attempt in November 2022, which was eventually unsuccessful. In response, the company modified its governance practises.

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Reactions to Genesis Global Trading’s Bankruptcy

by Blockchain News

Members of the cryptocurrency community expressed their opinions on the situation on social media shortly after the crypto lender Genesis Global Trading filed for protection under Chapter 11 of the United States Bankruptcy Code in the state of New York. Members of the crypto community shared their opinions on the most recent event in what appears to be an endless string of bankruptcies in the cryptocurrency space. These opinions ranged from the conviction that no one will be held accountable to the characterization of the entire concept of crypto lending as “stupid.”

There are others who feel that bankruptcy attorneys will emerge victorious in each of these competitions.

A member of this group who identified themselves as a creditor of Voyager said that consumer cash would be used to pay the legal team one million dollars, and in the end, “no one will be held responsible.”

Genesis has recently submitted its application for chapter 11.

Bankruptcy attorneys making profit on crypto bankruptcies.

— Coin Bureau (@coinbureau) January 20, 2023 Cameron Winklevoss, co-founder of Gemini, said that the bankruptcy is “excellent news” and a move toward Gemini subscribers receiving their money back. He referred to it as a “step.”

However, a member of the community responded to Winklevoss’ tweet by stating once again that the users are the only people who have been affected.

According to the user, Gemini is “also as culpable” for not doing enough research on the manner in which Genesis does business before to forming a partnership with the company. During this time, a crypto analyst drew up a diagram to show how crypto enterprises could have been linked during the current spate of bankruptcies that the sector has been experiencing.

The expert believes that the Genesis bankruptcy will shed light on the leverage cycle in the cryptocurrency market.

Some members of the community, who seem to be sick and weary of the negativity that surrounds the area, have stated their lack of faith in cryptocurrency firms.

A commenter on Twitter said that people couldn’t trust firms located in the United States anymore since all of the companies were interconnected.

Billy Markus, the developer of Dogecoin (DOGE), also weighed in on the controversy, labelling the whole notion of cryptocurrency lending as “dumb” and referring to everyone participating in the practise as a “idiot.”

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Nexo Capital to Pay $45 Million in Penalties

by Blockchain News

Due to Nexo Capital’s failure to register the offer and sale of its Earn Interest Product, the United States Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) have agreed to levy penalties against the cryptocurrency lender in the amount of $45 million (EIP).

On January 19, the SEC and the NASAA each released their own statement announcing the news to the public.

According to the statement released by the SEC, Nexo has come to an agreement with the agency to make a penalty payment of $22.5 million and to discontinue its unregistered offer and sale of the EIP to investors in the United States.

According to the article, the extra fine amount of $22.5 million will be paid to address comparable allegations brought forth by state regulatory agencies.

According to a statement released by NASAA, the settlement in principle was reached following investigations into Nexo’s allegedly fraudulent offer and sale of securities that took place over the course of the previous year. During the course of the inquiry, it was found out that EIP investors had the potential to receive interest on digital assets that they had lent to Nexo in order to generate passive income. “Nexo exercised complete autonomy in determining which operations would generate money and be used to generate returns for investors.

Through its website and other social media platforms, the firm sold and advertised the EIP as well as other goods to potential investors in the United States. The company suggested, in certain circumstances, that potential investors might get returns of up to 36% “that was said.

The Securities and Exchange Commission (SEC) noted that throughout the negotiating process for the settlement, the commission took into account Nexo’s degree of cooperation as well as the corrective actions that were swiftly implemented by Nexo in order to remedy their deficiencies.

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Maple Finance Provides $300m In Loans to Bitcoin Miners Struggling amid Market Crash

by Blockchain News

Maple Finance, Australia-based Decentralized finance (DeFi) firm for institutions to borrow from Liquidity Pools funded by the DeFi ecosystem, announced on Tuesday that it has launched a $300 million fund for Bitcoin miners.

The lender established the move as the cryptocurrency mining industry struggles with access to capital markets. Raising capital has become difficult for crypto mining companies this year as Bitcoin price has drastically declined and energy prices have skyrocketed. Maple is looking to fill the gap.

In a statement, Sidney Powell, the CEO and co-founder of Maple, said: “Recent market headwinds have caused lenders to pull back, while traditional financing vehicles have been slower to engage this sector. Miners play an essential role in growing the crypto ecosystem and local economies, and we are proud to extend a new financing vehicle to direct capital where it is needed the most.”

Maple said that the $300 million lending pool will provide 12 to 18 months loans with interest rates ranging from 15% to 20% to blue-chip Bitcoin mining and digital asset infrastructure firms in North America, Canada, and Australia.

The $300 million lending pool is targeting to lend out funds to blue chip private and public firms with “effective treasury management and prudent power strategies,” Maple said. The pool will only offer fully collateralized loans, either by digital assets or real-world assets, including mining hardware, power transformers, and other physical assets.

Maple plans to open more lending pools for the growing mining sector and expects to expand its lending services to fintech firms.

When Will Miners Recover from Crash?

Many Bitcoin mining firms that expanded operations last year to capture more profits are now struggling as the crypto’s prices plunged.

The recent market crash has left miners going through a painful situation. Mining Bitcoin has become less profitable as the price of the cryptocurrency has nosedived, with popular machines like Bitmain’s Antminer S9 becoming money losers amid increased electricity costs.

Many miners have been cornered into powering off their operations or selling their holdings, while some are struggling to repay billions of loans that are backed by their equipment.

Struggling miners who preferred not to shut down their rigs were approved to raise capital in the debt or equity markets and/or sell off Bitcoin holdings.

In July, several miners, such as Argo Blockchain, Bitfarms, Core Scientific, and Riot Blockchain, among others, sold part of their Bitcoin holdings to secure funds designed to sustain their operations.

Last month, Bitcoin mining hosting firm Applied Blockchain secured a $15 million loan to pay off its existing debt and fund the construction of its data centres.

The crypto market recently went through an extreme crash in May and still has not come out of it. Major cryptocurrencies went through price drops, with Bitcoin plunging its price by more than half.

Image source: Shutterstock

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NFT Lending Protocol Bend DAO Proposes New Measures against Bankruptcy Crisis

by Blockchain News

Subject to the bankruptcy crisis caused by depleted Ethereum reserves, NFT lending protocol Bend DAO has proposed new emergency measures pending a governance vote.

The NFT lending protocol provides asset collateral for NFT holders by using their NFT assets as collateral to borrow ETH. When someone deposits an NFT into BendDAO, they can borrow up to 40% of the collectable’s reserve price in ETH.

If the reserve price falls below a certain threshold, NFT depositors can liquidate their assets.

According to the Bend DAO development team:

“We are sorry that we underestimated how illiquid NFTs could be in a bear market when setting the initial parameters.”

At present, the platform has lent a total of 16,500 ETH, and the ETH loan utilization rate has soared from 57.6% to 86.8%.

NFT depositors are at risk of losing their NFTs if their collectable value plummets. Still, those who deposited ETH into the protocol will also suffer if the protocol cannot recover enough funds to pay them back.

To save the protocol from a credit crisis, the Bend Dao development team proposes to limit the liquidation threshold for collateral to 70% of the loan value, lower than 85%.

The company said it is also reducing the auction time for NFTs on its platform from 48 hours to four hours and removing the requirement that the minimum bid price for NFTs on Bend DAO is tied to 95% of the reserve price of popular digital collectables trading platform OpenSea.

BendDAO has liquidated 12 NFTs collateralized for ETH loans since August 14.

Image source: Shutterstock

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