Hello Cryptonauts 👩🏽🚀,
We are happy to have you back with us, there is quite a bit to catch you up on.
Stable coins have recently taken the news headlines with some attention from regulators that at this point is not quite clear as to what action the government will actually take against them.
Since they have had such a spotlight, we thought it would be prudent to help you understand them a bit more.
Stable Coins
What are they?
Stable coins such as Tether (USDT), Terra (UST), USD Coin (USDC), Dai, TrueUSD (TUSD) are pegged to the value of the US Dollar and meaning they aim to keep a stable price regardless of market dynamics.
How are they generated?
They are minted by collateralizing real world (e.g., US Dollars, Real Estate, etc.) and/or crypto assets in various mechanisms that can be quite familiar while some being more innovative.
What are Asset-backed stables?
USDT, USDC and TUSD are asset backed models issued by their companies using USD, gold, commercial paper, and other real world assets to secure secure their value. The reserves are regularly audited in order to justify the amounts of tokens that are being minted and released over time.
What are Algorithmic stables?
Dai and UST use crypto assets (e.g., Ethereum, Terra) as collateral in order to mint corresponding stable coins. Dai is issued by a DAO or Decentralized Autonomous Organization as collateral is locked in reserves on the Maker platform. UST is issued by the Luna protocol by burning the LUNA token in order to mint their UST. If there is less demand for their stable, it can be converted back into LUNA which would inflate the supply of this asset. In both cases, supply is able to inflate or deflate making the actual amount of tokens released dynamic similar to a central bank.
How should we look at regulations?
USDT has been under fire by the government for allegedly printing USDT that is not backed by anything and using it to inflate crypto markets. This case is still ongoing and has yet to be resolved. This report provides a more clarity on tallegationsons and probe into potential fraudulent activity.
What’s the take home?
It is clear that stable coins will face regulation in the coming years as Gensler regards them as “poker chips at the Wild West Casino” and in need of regulation. The government, specifically SEC, needs to decipher a method that allows for innovation of this technology while doing so in a lawful manner. While regulation is imminent, we are optimistic of their effects and know that serious projects are building in anticipation of such changes.
For further information:
Coin Stack and their Future of Money series is a fantastic cryptocurrency podcast that sheds light on the latest innovations and regulations in the space. They took some time to delve deeper into the reality of digital currencies issued by Central Banks. The idea sounds outlandish but it does appear that this is where things are headed.
A longer form discussion on this comes from the What is Crypto podcast and host Michael Nye interviewing Kory Hoang who runs Stably, a nascent stable coin firm. He casts light on the various kinds of stable coins and why they are essential to the future of banking.
What about us?
R.F. Capital has been busy as ever. We recently finished our summer internship round and could not be more excited about the young individuals that partnered with us to help share our expertise to the next generation. It will be incredible to see where these bright young minds take this space.
We also have many Venture Capital deals on the table with overviews below:
Blockchain/NFT project providing authentication of any type of data or any type of product. Seeking $5 million in funding for operations and development.
Blockchain DeFi Gaming using the play-to-earn model seeking to raise equity and liquidity for their token rounds. They have already profited 1M+ in 10 months. They hit #1 Most Bullish gaming projects on twitter for the 2nd time and by almost a 20% margin this time.
Asset Tokenization Platform specializing in tokenization of Real Estate and seeking growth funding of $5 million in equity and also doing a token round.
DeFi Stable Coin App caters to non-crypto native investors who are looking to obtain safe and secure yields from DeFi protocols (stable coins only). Raising $5 million in equity seed funding.
For more information about any of these products, reach out to our VP of Strategic Partnerships Jordan Hood at - @jordanhood@rfcapital.io.
Further Research
Recently published market assessment from our Principle shedding some fundamental and technical analysis that keeps you ahead of the pack. - link
TL;DR - We identified mixed signals short term, but long term have exciting bullish indication with on-chain metrics showing that the largest wallets have been buying Bitcoin no matter what price it is over the past year.
A deep dive into headline catching protocol Solana that reveals all is not as it seems for the Layer 1 front runner. - link
TL;DR - Solana has been making waves all summer but has more work to do before they can proclaim to have unseated their competitors.
Thank you all so much for tuning in to what we have going on and where these markets are headed. Until next time, we wish you the best.