MakerDAO Keeps USDC as Primary Collateral for Dai

Since there is a possibility of hazards being linked with USDC, the MakerDAO Risk Core Unit recently proposed the notion of diversifying the collateral for Dai. This suggestion was made as a response to the proposal. Nonetheless, MKR holders voted decisively in support of maintaining USDC as the major collateral for Dai. With a vote of 79.02% in favor of expanding the USDC-to-DAI minting capacity and decreasing the cost to 0%, MKR holders voted in favor of retaining USDC as the primary collateral for Dai.

Due to USDC’s “possibly more dangerous exposure to uninsured bank deposits” and “a weaker legal framework” in comparison to its rivals, the suggestion advised diversifying collateral into GUSD and USDP. Nevertheless, according to the Risk Core Unit, the risks that are connected with utilizing USDC as collateral have dramatically diminished from the previous week. This information was provided by the Risk Core Unit.

When a string of failed banks forced the USDC to briefly lose its $1 peg, the decision was made to maintain USDC as the principal collateral for Dai transactions. In response to this, MakerDAO has introduced efforts to prevent Dai from being undercollateralized. These actions include increasing the charge to mint Dai using USDC as collateral from 0% to 1%, as well as lowering the daily minting cap for this procedure.

A vote of confidence in the stability of the USDC stablecoin and its capacity to retain its $1 peg can be inferred from the fact that USDC will continue to serve as the principal collateral for the Dai cryptocurrency. Yet, this does bring up concerns about the possible hazards that are connected with placing a significant amount of reliance on a single collateral item.

It is quite possible that new discussions and disputes around collateral diversification will continue to emerge inside decentralized autonomous organizations such as MakerDAO as the cryptocurrency market continues to expand and stablecoins become more widely used.

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Binance-Backed WazirX Exchange to Delist USDC, USDP & TUSD

Indian cryptocurrency trading platform WazirX has announced it will be delisting USD Coin (USDC), USDP, and TUSD in a move that is similar to its so-called parent company, Binance Exchange.

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In a Monday update, WazirX said the deposit support for these tokens has already been halted, and that withdrawal support will run from now until 5 p.m, IST on September 23rd.

The exchange said the tokens will automatically be converted to Binance USD (BUSD) and the conversion will run until October 5. 

The conversion from USDC, USDP, and TUSD will be on the ratio of 1:1. While the delisting process is billed to continue until September 26, the trading platform said users will still be able to view “their USDC, USDP, and TUSD balances under the BUSD-denominated account balance when the conversion is complete.”

The delisting of the three tokens comes off as regulatory scrutiny mounts, as well as Binance exchange made a similar move in the past month. 

The move has been welcomed with dissenting views by industry stakeholders, however, veterans like Jeremy Allaire, the co-founder and Chief Executive Officier of USDC issuer, Circle have backed the exchange, noting among many things that the delisting of USDC may push the stablecoin to become the standard stablecoin rail between centralized exchanges (CEXs) and decentralized exchanges (DEXs).

With WazirX making a similar move from Binance, it is not clear at this time whether the two trading platforms have set aside their differences especially as it concerns the ownership of the Indian offshoot. 

During the probe of WazirX over fraud-related cases by the Indian Enforcement Directorate (ED), dust was raised as to the ownership status of the exchange. While there is an understanding that Binance had earlier acquired WazirX based on an announcement dating back to 2019, the trading platform’s CEO Changpeng Zhao in a spat with WazirX’s Nischal Shetty said the acquisition did not pull through.

While the ownership status is yet to be cleared, that WazirX is delisting the top stablecoins on its platform in favor of BUSD shows there is a connection between both entities.

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Bank of America Says Binance to Benefit from Increased Supply of Its Own Stablecoin

Bank of America (BAC) has talked about the recent decision by the Binance exchange to convert all existing user balances and future deposits of three stablecoins USD coin (USDC), trueUSD (TUSD) and pax dollar (USDP) into its native Binance USD (BUSD).

On Friday, the bank released its research report pointing out that while Binance’s move may generate limited additional revenue in the short term for the exchange, it could have wider implications in the long term.

The bank said the automatic conversion may increase the supply of BUSD by as much as $908 million, as 1% ($10 million) of USDP’s supply and 2% ($898 million) of USDC’s supply are held on Binance.

The Bank of America acknowledged that the fact that BUSD holds a market capitalization of 19 billion indicates that the stablecoin is not being used regularly throughout the broader crypto ecosystem and therefore, lacks utility.

However, the bank sees the potential for a larger increase in BUSD supply over the long-term as customers become more familiar with the stablecoin and its applications across the ecosystem adding more support for it in an attempt to attract more users.

According to the Bank of America, Binance will benefit from this increasing supply because it is able to invest the additional reserves that will back the stablecoin in cash equivalents like U.S. Treasury and overnight loans secured by Treasury to earn interest income.

On the other hand, the bank said although the implications for USDC are limited, there is the potential for the stablecoin to increase its market share relative to Tether (USDT). This is because Binance users may be more likely to convert BUSD into USDC than into USDT when withdrawing funds.

Tether (USDT), the largest stablecoin by market cap, was excluded from the automatic conversion. USDC stablecoin has a market capitalization of just under US$52 billion, followed by BUSD at US$19.5 billion.

The market leader Tether (USDT), has a market capitalization of US$67 billion, and will still be tradeable on Binance.

Questioning Binance’s Move

Bank of America joins other stakeholders who have recently raised questions about Binance’s decision to stop supporting USDC and other stablecoins on its platform.

On Monday, Binance announced that it would convert customers’ holdings in three rival stablecoins — USDC, Pax Dollar (USDP) and True USD (TUSD) — into BUSD on September 29. As a result, it would remove spot, future, and margin trading with USDC, USDP, and TUSD pairs.

Binance said the decision was designed to “enhance liquidity and capital-efficiency for users.”  However, the news was met with skepticism, as some users faulted the decision to convert rival stablecoins into Binance stablecoin.

Concerns have been raised about a possible monopolistic behavior of Binance’s move to sideline other stablecoins in order to promote its own.

But, Circle CEO, Jeremy Allaire, recently backed Binance’s decision, saying that the new change will help USDC become the market’s preferred stablecoin rail for moving funds between centralized exchanges (CEXs) and decentralized Exchanges (DEXs).

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Binance to Convert Users’ USDC Into Its Own Stablecoin

Binance cryptocurrency exchange announced on Monday that it has introduced “BUSD Auto-Conversion”. 

The latest program will, therefore, allow customers to convert any existing user balances and new deposits of four stablecoins such as USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD), into its own native stablecoin BUSD, effectively delisting trading of the three rival stablecoins.

The company disclosed the reason behind the move: “In order to enhance liquidity and capital-efficiency for users, Binance is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USDC, USDP, and TUSD stablecoins at a 1:1 ratio.”

Binance further said it will remove and stop any trading on spot pairs, including USDC, USDP and TUSD.

The conversion is scheduled to start on September 29. “With effect from 2022-09-29 03:00 (UTC), users will trade with a consolidated BUSD balance on the Binance Platform that reflects their balances of these four stablecoins (BUSD, USDC, USDP and TUSD) post-conversion”.

USDC is the second largest stablecoin by market cap at $51 billion, according to CoinMarketCap. Binance’s BUSD stablecoin comes third, with a market cap of $19 billion, while USDP and TUSD are far smaller.

The move will effectively remove direct custody of USDC, USDP and TUSD for Binance’s 120 million users worldwide.

However, the firm said the move will not affect users’ choice of withdrawal. “Users will continue to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance”, the company explained.

The exchange said customers will be able to see the converted balance on their accounts within 24 hours. And further stated that the minimum amount for manual conversion is 1 USDC, USDP, or TUSD while accounts with lower balances auto-convert to BUSD.

Binance also said it may expand or amend the list of stablecoins eligible for auto-conversion.

The exchange further said it will remove the support for USDC, USDP, and TUSD products, including spot trading, futures, and margin lending.

USDC products affected include crypto loans, saving accounts, and DeFi staking subscriptions, which will be closed and liquidated on September 23rd.

The news is met with some scepticism, as some users have faulted the decision to convert rival stablecoins into Binance stablecoin.

“Crypto monopoly 101, Binance will remove $USDC as a tradable asset by Sep 25 to push their $BUSD.” a Twitter user by the name ‘@BloodgoodBTC’ said.

A Circle spokesperson also commented about the development: “Based on market activity, it would seem much of this transition has already passed, and while optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions.”

Tether (USDT), the largest stablecoin that has a market cap of $68 billion, will remain accessible on the Binance platform.

Stablecoins, a newer breed of cryptocurrency, are gaining popularity for their commitment to minimising the price volatility that has limited the use of Bitcoin and other digital assets as a medium of exchange.

Since Tether (USDT) was launched in 2014 as the first stablecoin, the list has grown to include the likes of USD Coin (USDC), Dai (DAI), True USD (USDT), Binance USD (BUSD), Paxos Standard, Digix Gold, Havven’s Nomin, among others.

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WhatsApp Rolls Out Crypto Payments Pilot Program in the US

One of the world’s largest mobile messaging services is launching a new feature enabling its users to send and receive crypto assets.

American platform WhatsApp just announced a new pilot program that integrates Novi, the digital wallet developed by leading social media platform Facebook, now Meta. US-based WhatsApp users will now be able to exchange digital currencies without having to switch over to another app.

Head of WhatsApp Will Cathcart says in a tweet,

“New in the US: use your Novi digital wallet to send and receive money right within a WhatsApp chat.

People use [WhatsApp] to coordinate sending money to loved ones, and now Novi will help them do that securely, instantly and with no fees.”

Back in October, Novi first announced a limited rollout involving the Paxos Dollar (USDP) stablecoin, which is secured by the Coinbase Custody Trust Company.

Now Novi’s head Stephane Kasriel says it’s time to take the next step forward.

In a series of tweets he explains,

“Since we introduced the Novi pilot just six weeks ago, we’ve been able to test and learn which features and functionality are most important to people and focus our efforts on making those even better.

We’re still very early in the Novi pilot journey, so we made the decision to test this new entry point in one country to start and will look to extend it once we’ve heard from people what they think of this new experience.

Using Novi doesn’t change the privacy of WhatsApp personal messages and calls, which are always end-to-end encrypted.”

The Novi website says that WhatsApp users can send money as simply as they would send a message, all while still remaining in the chat.

Currently, it’s free to both send and receive funds using Novi on WhatsApp.

WhatsApp is owned by Meta and is estimated to have over two billion users worldwide.

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Facebook Taps Coinbase to Offer Custody Services for Novi Digital Wallet Rollout

On Tuesday, October 19, Facebook Inc announced that it has launched its new digital wallet for crypto assets called Novi and has hired Coinbase cryptocurrency exchange to be its custody partner.

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According to the statement, Facebook is currently rolling out Novi digital wallet based on a small pilot program in The U.S. and Guatemala to allow users to trade the Paxos Dollar (USDP) stablecoin. The company said that the full rollout will enable people to send and receive money abroad instantly, securely, and with no fees.  

Coinbase is assisting Novi through Coinbase Custody, which keeps funds secure with its software that manages cryptocurrency transactions.

In other words, Novi users can buy Paxos dollar (USDP) stablecoin through Novi, and Novi will deposit the funds with Coinbase.

According to its market capitalisation, Paxos dollar (USDP) is a stablecoin whose value is pegged to the U.S. dollar and currently ranks position 100.

As per the announcement, Facebook stated that it selected USDP to conduct their test for their systems with the stablecoin, which has been operating successfully for more than three years. The social media giant also mentioned that it chose USDP because stablecoin has important consumer protection and regulatory attributes.

David Marcus, the head of Novi, talked about the development and said that they chose USDP because its services are fully backed by U.S. dollars and are held 100% in cash equivalents and cash. “This means that people can easily withdraw their money in their local currency when they choose,” he explained.

Facebook stated that it eventually plans to migrate Novi to a cryptocurrency it backs called Diem once it obtains regulatory approval. Facebook mentioned that the goal of Novi has always been enabling interoperability with other digital wallets. Marcus said:

“The goal of Novi has been and always will be to be interoperable. Imagine if you couldn’t send an email from a Gmail address to a Yahoo address,” 

Diem Facing Regulatory Concerns

Since its inception, the Facebook-affiliated Diem cryptocurrency has changed nearly everything about itself – timeline, partners, structure, and name. It even changed its headquarters from Switzerland to the U.S., one of the most important moves.

Due to its relationship with the data-hungry Facebook, Diem (formerly Libra) has encountered pressures from regulators across the globe. Some of the major concerns by regulators involved fears that Diem could threaten monetary stability and potentially enable money laundering. Facebook’s involvement also implied that regulators are concerned over how it could protect users’ privacy.

To move ahead, the project relocated its headquarters to the U.S. and chose Silvergate bank, a crypto-friendly bank based in California, to issue the stablecoin.

Despite losing some members such as PayPal, eBay, Vodafone and others, Diem picked up other experienced partners that could assist in smoothening its path to other countries.

 Meanwhile, a group of five Senate Democrats yesterday wrote an official letter to Facebook CEO Mark Zuckerberg urging him to discontinue the Novi wallet pilot. Led by Senator Elizabeth Warren, the policymakers argued that Facebook had not provided a satisfactory explanation of how Diem would prevent illicit financial flows and other criminal activity.

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Facebook Chooses Coinbase As Custody Partner for New Digital Wallet Rollout

Social media giant Facebook is launching the Novi crypto wallet today in the United States and Guatemala.

The initial rollout only allows users to trade the Paxos Dollar (USDP) stablecoin, which is secured by Coinbase.

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An announcement on the Coinbase Blog says,

“Novi users’ funds will be held within Coinbase Custody Trust Company, a qualified custodian and a New York limited purpose trust company. 

Novi users also benefit from Coinbase Custody’s leading insurance program, which includes a $320 million commercial crime policy.”

Coinbase Custody claims to securely manage over $180 billion worth of crypto assets as of June 2021.

According to David Marcus, the head of Facebook Financial (F2), Novi’s “small-pilot” rollout will test network capabilities while demonstrating a real-world use case for USDP.

“We’re doing a pilot to test core feature functions, and our operational capabilities in customer care and compliance. 

We’re also hopeful this will demonstrate a new stablecoin use case (as a payments instrument) beyond how they are typically used today.”

The Novi platform’s planned cryptocurrency Diem (formerly Libra) is still facing regulatory approval and will not be available in Novi wallets until approved.

Marcus concluded a Twitter thread discussing the announcement by saying the company aims to disrupt the payments landscape.

“Beyond the pilot, our business model is clear. We’re a challenger in payments. We’ll offer free person-to-person payments using Novi. Once we have a solid customer base, we’ll offer cheaper merchant payments and make a profit on merchant services.

Scaling Novi will take time and this pilot is a great chance for us to learn from our early customers. We want to make sure that our wallet has been fully tested before we open Novi up to more people.”

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FTX customer seeks help after mistaken deposit allegedly results in $1M in fees

A crypto hodler is outraged after allegedly copping a $954,135 fee from centralized exchange FTX. The trader claims the fee was charged over a mistaken deposit they believe was the exchange’s fault.

On Oct. 6, the Rekt Blog published screenshots of correspondence that suggest the problems began when the customer deposited around $6.3 million in USDP, the stablecoin token for DeFi borrowing platform Unit Protocol, in late September.

Unfortunately, the Paxos stablecoin has also rebranded to USDP and the exchange changed the PAX ticker to USDP in late August. So the user apparently deposited $6.3 million of unsupported USDP tokens into the exchange’s address for the Paxos stablecoin.

FTX compensated the user for the mistaken deposit by returning around $5.4 million in stablecoins but deducted a 15% fee. The disgruntled user fired back:

“You have deducted more than $1m off my initial deposit amount. This does not align to your “Wrong Address or Chain” policy. I did not deliberately deposit USDP to your FTX exchange, I was misled. I wish to appeal please.”

Rekt reported that FTX did not abide by its own terms and conditions which state a fee up to 5% will be charged in such circumstances.

However, when Cointelegraph checked, the conditions currently state that a minimum of 5% may be levied if the exchange has to recover deposits to incorrect addresses.

Related: FTX smashes crypto funding record with $900M raise to become exchange decacorn

Rekt said it had verified the deposits on the blockchain and contacted FTX for comment but had not received a response. It called on the exchange to rectify the problem.

“As decentralized exchanges grow in popularity, trust becomes the most valuable feature that a CEX can offer. In this case, FTX has broken that trust, and they must now take action to fix it.”

The claims were also posted on the FTX Official subreddit but had been deleted late last month. One respondent to Rekt’s tweet claimed he had posted the blog in the FTX Telegram group and got banned instantly.

Cointelegraph has contacted FTX for comment. There had been no response at the time of writing.