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Gemini Offshore Derivatives Exchange | USDT $1B Excess Funds

Marco Manoppo
April 24, 2023

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Good Morning,

It was a relatively quiet weekend in crypto, but the markets are down. BTC and ETH fell below $27,500 and $1,850 respectively.

More US-based exchanges are going abroad. Following Coinbase’s announcement from last week, Gemini announced that it will launch an offshore derivatives exchange.

Is crypto dead in America?

In Today's Email:

What Matters: Gemini’s offshore derivatives exchange 🌴
Products: Offramp, crypto-fiat conversion without KYC 🤝
Charts: Arbitrum tx doubles Optimism, USDT $1B excess 📈

Narratives: Don’t force a trade. Assess the support levels and re-enter when the times are appropriate.

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WHAT MATTERS

Gemini Plans Offshore Derivatives Exchange

Gemini

State of play: The Winklevoss twin-led US-based exchange announced that it’s launching an offshore derivatives platform. It will be offering a BTC perpetual contract denominated in Gemini Dollar (GUSD), with ETH perpetual contract coming soon.

The default leverage will be 20x, with a maximum possible leverage of 100x.
The jurisdiction that it will be based at is still unknown, but the entity is called Gemini Foundation and will be available to customers in: Singapore, Hong Kong, India, Argentina, Bahamas, Bermuda, British Virgin Islands (BVI), Bhutan, Brazil, Cayman Islands, Chile, Egypt, El Salvador, Guernsey, Israel, Jersey, New Zealand, Nigeria, Panama, Peru, Philippines, Saint Lucia, Saint Vincent & Grenadine, South Africa, South Korea, Switzerland, Thailand, Turkey, Uruguay, and Vietnam.

What’s next: Those who are interested can sign up here to be notified when it launches.

Our take: Gemini’s market share in the US has been relatively stagnant in the past couple of years. Just like Coinbase and other US-based exchanges, Gemini is leaving a lot of money on the table by not tapping the derivatives market.

Post the FTX downfall, there’s a “gap” that well known US-based exchanges can fill in the international landscape. While Binance is actively improving its reputation, competitors can come in and take away market share.

For builders: Improving capital flow between US and non-US entities is still the biggest value unlock for those building in crypto. Centralized exchanges traditionally took on this role, but there’s an opportunity for DeFi builders to step in.

For investors: We’re seeing a rise of lesser known exchanges that are vying for market share post FTX downfall. Names like Bitget, MEXC, and others have been a lot more aggressive in their off-chain and on-chain expansion.

Investing in this area will be extremely lucrative — but one needs to be very aware of counterparty risks and specific competitive edges in respective jurisdictions.

Take a peek at our new referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

PRODUCTS OF THE WEEK

Offramp: Crypto-Fiat Conversion Without KYC

Offramp

Easy Crypto-Fiat Conversion: Offramp provides easy crypto-fiat (and vice-versa) conversion via decentralized swaps without any KYC. It’s currently available for MetaMask and Wise users. The product is still in an invite only beta state.

Offramp charges no fees for makers (Liquidity Pool providers) and a flat 0.3% fee for swap users.
Users need to have a Wise (TransferWise) account, but Offramp will soon be expanding support for Revolut, SEPA, and others.
It’s currently only supporting the Ethereum blockchain.

Other cool products:

CryptoSmartlife, an AI-powered crypto thematic basket investment.
Konsta Network, an L1 EVM-compatible chain.
W3UP, a domain extension tool for DAOs.
Slash, a web3 payments provider.
THX Network, an NFT/token powered loyalty tool for websites and apps.

CHARTS OF THE WEEK

Arbitrum Doubles Optimism’s Tx

Messari

In the past few months, Arbitrum’s count of transaction has leaped over Optimism’s. It is averaging around 660,000 transaction, double that of Optimism’s.

Our take: The number of transaction unsurprisingly soared prior to the ARB token launch.

It has seen a significant dip while Optimism is soaring back. Arbitrum needs to keep its momentum, especially after the DAO drama around the 700M in ARB token.

To watch: Synthetix is doing a lot of development in Optimism. If there’s a successful dApp on Optimism that can rival the use case of GMX, it might reverse the trend.

For the foreseeable future, these L2 networks are highly dependent on their most successful dApps.

USDT ~$1B in Excess Assets

Delphi Digital

State of Play: Tether’s USDT has $960M in excess assets net of its liabilities. The number represents 1.45% relative to USDT’s total supply. As interest rate goes up, stablecoin providers have been able to book lucrative profits.

Proportional to its total supply, USDT has been able to generate a lot more revenue compared to USDC.

Our take: Tether’s “lack of transparency” and less dependency on US regulators turns out becoming its competitive edge. This edge might not last forever, but it seems to be working extremely well in an increasingly multipolar world.

QUICK BITES

Gemini plans an offshore derivatives platform.
OPNX investors denied involvement.
Aptos introduces delegated staking.
Trust Wallet fixed a vulnerability.
Binance’s CZ welcomed EU’s crypto regulation, MiCA.
Do Kwon comments on SEC’s accusation of securities fraud.

MEME & NOTEWORTHY READS

Coin Center’s comments to the SEC regarding the definition of “exchange”.
a16z crypto’s read on the 7 sanity checks before designing a token.
Electric Capital’s read on Q1 2023 crypto developer report.

the modern trolley problem
— gaut (@0xgaut)
3:17 PM • Apr 22, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.