💲USDT Briefly Dips Under $1

The Defiant

The Defiant Daily

GM Defiers!

Happy Friday! This week, the crypto market was on edge as Tether's USDT stablecoin briefly fell below its $1 peg, sparking concerns about the assets backing the world's largest stablecoin. Meanwhile, financial documents released by New York’s Attorney General revealed that Tether was backing its USDT stablecoin with Chinese commercial paper as of 2021.

In DeFi news, a large leveraged position in CRV tokens across major DeFi lending protocols has raised eyebrows, while Lens Protocol, the decentralized social media protocol from the team behind Aave, has opened up to governance proposals from the public. Finally, EigenLayer, a protocol that allows Ethereum stakers to validate third-party services for a yield while also earning staking rewards, has successfully completed the initial stage of its mainnet launch.

✍️ In today’s newsletter:

  • USDT dips under $1, Tether cites market manipulation
  • Newly released financials show Tether operated $5B loan program in 2021
  • Curve founder's Aave position raises concerns
  • Lens releases governance framework
  • EigenLayer launches mainnet


📈 Markets in last 24 hrs:

BTC$27,705 0.42%
ETH$1,864.6 0.14%
MKR$688 -0.29%
SPY$412.07 0.08%
UNI$5.451 0.41%
LDO$2.081 0.19%


Watch our V4 deep dive with Sara Reynolds, Head of Protocols at Uniswap. And check out our podcast with Alex Gluchowski, the CEO of Matter Labs.


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USDT Stablecoin Briefly Dips Below $1 as Financial Document Disclosure Looms

TLDR USDT, the largest stablecoin in the crypto market, fell below its $1 peg on June 14, causing ripples in the crypto market. Tether, the issuer of USDT, suggested that the dip may be related to CoinDesk, a crypto news publication, obtaining documents about Tether's quarterly reports from the New York Attorney General’s office.

SO WHAT Tether suggested that these documents might reveal a previous gap in the stablecoin's backing but insisted that they do not reflect the current state of their reserves. The company also hinted at possible market manipulation, noting the suspicious timing of the USDT sell-off.


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Newly Released Documents Detail Tether’s Exposure to Chinese Securities

TLDR Newly released financial documents reveal that Tether, the issuer of the USDT stablecoin, used Chinese commercial paper as part of its backing in 2021. The documents also provide details about Tether's banking partners and a $5.1B loan program.

SO WHAT The information sheds light on the composition of reserves backing USDT, which has been a subject of concern for some time. Tether has previously faced allegations that it did not hold enough reserves to back all the USDT in circulation.


Gauntlet Flags Risk Posed By $176M CRV Position On Aave

TLDR A large leveraged position in CRV tokens, held by Michael Egorov, co-founder of the decentralized exchange Curve Finance, has raised concerns in the DeFi space. Egorov has an outstanding debt of $60M in stablecoins, secured by CRV worth $176M. Risk management firm Gauntlet has recommended that Aave, the lending protocol where Egorov has collateralized his CRV, freeze the CRV market on its V2 platform.

SO WHAT The concern is that if the price of CRV drops significantly, Aave may have to liquidate the position but may not be able to do so due to its size. This could leave Aave with bad debt and could also have broader implications for the DeFi market.

Web3 Social Media

Lens Protocol Releases Open Governance Framework

TLDR Lens Protocol, a decentralized social media protocol developed by the team behind Aave, has opened up to governance proposals from the public. The Lens Improvement Proposal (LIP) process allows developers, creators, and users to propose changes and upgrades to the protocol. Proposals that gain widespread community support may be incorporated into Lens' development roadmap.

SO WHAT This move towards open governance and decentralization is a key part of Lens Protocol's development. It allows the community to have a say in the future of the protocol and encourages collaboration and innovation.


Ethereum ‘Restaking’ Protocol EigenLayer Launches On Mainnet

TLDR EigenLayer, a protocol that allows Ethereum stakers to validate third-party services for a yield while also earning staking rewards, has completed the initial stage of its mainnet launch. Users can now deposit liquid staking tokens into the protocol or set up an EigenPod to natively restake ETH. The protocol supports Lido’s stETH, Rocket Pool’s rETH, and Coinbase’s cbETH tokens.

SO WHAT EigenLayer introduces a new way for Ethereum stakers to earn additional yield. However, the protocol's success is likely to depend on its ability to compete with DeFi protocols as a source of additional yield. The protocol's innovative approach to harnessing Ethereum's staking ecosystem as a shared security layer could also have broader implications for the Ethereum network and the wider crypto space.



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