What is going on?
While we generally avoid commenting on larger market movements, and especially anything that relates to price fluctuations, its hard to avoid the large developments that have been happening over the last week involving the once well regarded crypto exchange FTX.
FTX's owner, 30 year old Billionaire Sam Bankman-Fried (SBF) who was once declared the "next Warren Buffett", attracted powerful and well-known investment firms such as Iconiq capital, Sequoia Capital, Softbank and BlackRock just to name a few. The most recent capital raising attracted $500 million dollars in investment, valuing the privately held FTX at $32 billion. This week a number of these investment firms marked down their FTX investment valuations to zero.
It started on November 2nd, with a report that cryptocurrency exchange FTX had its balance sheet leaked uncovering high dependence on its FTT token, and risky loans to his own trading company Alameda Research. Rumours then spread that FTX was insolvent. Binance, a competitor exchange who was an original investor in FTX, announced via their CEO CZ they would be liquidating their 2 billion in FTX's FTT tokens. This news caused mass user withdrawals of funds with FTX halting withdrawals due to a lack of liquidity. SBF then announced that FTX would be acquired by their competitor Binance, only for the deal to fall through after due diligence when the extent of their problems were uncovered. FTX had been lending its customer funds to Alameda for trading, leaving billions of dollars unaccounted for. This week they were unable to find the extra cash shortfall of $8 billion and subsequently filed for bankruptcy.
This follows on the recent bankruptcies that brought down crypto lender Celsius Network, hedge fund Three Arrows Capital and crypto broker Voyager Digital after the $40 billion collapse of Terraform Labs algorithmic stablecoin terraUSD and its sister coin LUNA in May.
There continues to be lots of uncertainty and doubt in the market, especially when people don't know what crypto exchanges are doing with customer funds. It has led to a number of people rightfully pulling funds off of exchanges, but the full effects the broader ecosystem is yet to be fully uncovered. FTX had a very wide reach in terms of partners (who had loaned funds to FTX) as well as a range of holdings that will probably need to be liquidated to pay down part of what it owes.
For a light hearted summary of what's happened:
Now back to Cardano, which didn't show up in the list of FTX holdings or have any association with the above, is still making good technical progress and has a number of interesting developments coming up. So time to get into what has been happening in the Cardano ecosystem.
First there has been a lot of discussion about the different staking parameters which impacts the maximum delegation amount for a pool before penalties, and also the minimum fixed fee that is currently set. There will be more news coming based on the community feedback for this area so stay tuned.
The Catalyst Program is still continuing and has funded around 1200 projects so far with 800 just in 2022! Lots of work on governance and transparency, including moving to milestone-based reporting aiming to get the most from the funds supplied and ensuring higher quality projects.
Finally there is the IO ScotFest coming up from 18th - 19th November with live-stream speeches, presentations, project updates, and Cardano announcements. This comes as Cardano heads into the Voltaire age which lays the foundations for decentralised decision-making. This is followed by the Cardano Summit from the 19th - 21st November which has a whole old of exciting presentations focusing on those who are building on Cardano. Make sure to sign up here.
As we head into the holiday season and the end of the year we have done another round of donations to charities that we care about, they include:
- Against Malaria Foundation: $1000 donated + $2000 corporate match = $3000
- GiveDirectly: $600 donated
- TOTAL IMPACT: $3600
Thanks again for all your support.
The WIRED team.