Monday, June 24, 2024

tokenization market size, stablecoins roundup, budget deficit alarm

“Sometimes what is most familiar can be as difficult to perceive accurately as what is wholly missing.” – Hannah Pitkin ||

Hi everyone! I hope you had a fantastic weekend, touched grass, and enjoyed some good weather. Because, ouch, those crypto markets.

Today’s newsletter contains the promised weekly roundup, this time of developments in stablecoins. I also look at the new McKinsey tokenization report, and at the CBO estimate revisions. Plus, some other cool links, and an excellent Monday music recommendation, if I say so myself. 😋

If you find Crypto is Macro Now useful, would you mind sharing it with your friends and colleagues? ❤

Programming note: I’m travelling later this week, so the premium daily Crypto is Macro Now won’t publish on Thursday or Friday. Back on Saturday with the free weekly!

If any of you are going to be at the HedgeWeek event on Thursday, I would love to say hi!

IN THIS NEWSLETTER:

• Stablecoins roundup: yield-bearing, fund raises, Australia

• Tokenization market size?

• About that budget deficit

If you’re not a subscriber to the premium daily, I hope you’ll consider becoming one! You’ll get ~daily insight into the growing overlap between the crypto and macro landscapes, as well as some useful links. And there’s a free trial!

WHAT I’M WATCHING:

Stablecoins roundup

This week’s roundup of stablecoins will be divided into two sections, to avoid this newsletter getting too long – there’s lots going on in Japan, but I’ll talk about that tomorrow!

Yield-bearing stablecoins

We pretty much all understand stablecoins, the “basic” part of crypto innovation – there’s not much mystery in tokens backed by 1:1 fiat currency. Only, now they’re getting a bit fancy, mainly by offering yield. Sure, this isn’t new, we’ve had (and been burnt by) yield-bearing stablecoins before. But activity in this area is picking up again, and has a different flavour.

You’ve probably heard of the Ethena project and its USDe dollar-pegged stablecoin that generates a roughly 10% yield – at times this has been as high as almost 70%. The yield comes from combining staking with a positive ETH funding rate, that at the same time maintains the peg. (Before you rush into that attractive yield, please do some research – there are market risks, counterparty risks and more, and I personally am very skeptical that in a down market it would maintain either a positive yield or its peg. I hope I’m wrong.)

Now, we’re getting some diversification. The past few weeks has seen a flurry of activity in yield-bearing stablecoins, with two new market entrants: