Thursday, June 15, 2023

The surprise message, why it's good news, why crypto markets didn't like it, and some intriguing news on blockchain bridges

“History is not what you think. It is what you can remember.” – W. C. Sellar ||

Hi all! Yesterday sure was interesting, and today is shaping up to be even more so. There are a LOT of words below that manage to only superficially sketch out the tectonic change we saw yesterday… if it’s too much to read, scroll straight to the bottom to see a gif of a baby goat.

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WHAT I’M WATCHING

A strong message shift. Yesterday’s FOMC statement and press conference delivered a rate hike pause, no surprise there. Hidden in the messaging, however, was a big surprise that in retrospect makes a lot of sense. More on this below.

USDT depeg. Jitters in the crypto market are high right now – traders didn’t like what they heard from the US Fed yesterday, and today’s USDT depeg didn’t help. More on this below.

Blockchain bridges. The past few hours have seen a couple of announcements acknowledging that security tokens will run on many blockchains, and that liquid markets will need an effective bridge. First, the Korea Securities Depository (KSD) announced plans for a securities token platform. That in itself is a big deal, in that it acknowledges the encroaching overlap between traditional and crypto markets. But the KSD went further by recognizing that tokenized securities will run on many different blockchains, even within a single issuance, and that a way to bridge them will be needed.

Echoing this, enterprise blockchain development firms R3 and Adhara announced Harmonia, a partnership that will work on interoperability protocols that enable atomic cross-chain settlement between institutions. Seamless and low-risk interoperability has so far been a difficult problem to solve, although several initiatives are working on this, for both public and private blockchains. Adding a broader set of approaches to the problem increases both awareness of the importance of multi-chain development, as well as the probability of finding a solution the market likes.

MARKETS

Powerful messaging