November 27, 2023

Amberdata Digital Asset Snapshot: Binance Settles & Makes Changes

Binance has settled a 4.3 billion settlement with the US Department of Justice (DOJ) and Commodities Futures Trading Commission (CFTC) that saw a board restructuring and CEO Changpeg “CZ” Zhao stepping down as CEO, with the new CEO being named as long-time insider Richard Teng. Binance pled guilty to anti-money laundering charges in the DOJ suit and to offering crypto derivatives without registering as a futures commodity merchant in the CFTC suit. The DOJ is also recommending the court impose a $50 million fine on CZ. The case against Binance on behalf of the SEC is still ongoing as the SEC did not participate in the settlement. Their charges include running an illegal securities exchange and mishandling customer funds.

The SEC has also filed a new suit against US-based exchange Kraken. The suit alleges commingling $33 billion in user assets, along with allegations similar to those brought against Binance and Coinbase, including engaging in securities sales without registration. The allegation of asset commingling is worrying, especially considering the case against FTX which had done this very thing. In February this year, Kraken agreed to a settlement of $30 million after SEC charges alleging the failure to register its staking-as-a-service program, which led to the suspension of the service and staking programs.

OKX announced plans to launch an Ethereum Layer 2 network named X1. The network is built with the Polygon Chain Development Kit (CDK) in collaboration with Polygon Labs. The Layer 2 follows a new trend for centralized exchanges looking to expand revenues and new avenues for users, such as Coinbase’s Base chain success and Kraken’s recent L2 announcement.

Spot Market

Amberdata API Centralized Exchange (CEX) comparisons from weeks 11/13/2023 and 11/20/2023. Binance, BinanceUS Bitfinex, Bithumb, Bitstamp, Bybit, Coinbase, Gemini, huobi, Kraken, MEXC, OKX, Poloniex

Centralized Exchange (CEX) comparisons from weeks 11/13/2023 and 11/20/2023.

Amberdata API Centralized Exchange (CEX) trading volume market share for the last 30 days. Binance, BinanceUS Bitfinex, Bithumb, Bitstamp, Bybit, Coinbase, Gemini, huobi, Kraken, MEXC, OKX, Poloniex

Centralized Exchange (CEX) trading volume market share for the last 30 days.

Binance’s market share for the last 30 days has continued to wane, consistently falling below 50% for the last week. The exchange’s settlement with the DOJ and CFTC will make for an interesting period as Binance will hope to recover users lost during a long period of uncertainty as the cases had undertones of risk. The case is likely to pave a way forward for a return to the U.S. markets which has all but disappeared after Binance US became a crypto-only exchange earlier this year.

Amberdata API Centralized Exchange (CEX) trading volumes for the top five traded tokens over the last 30 days. BTC USD DOGE USDT ETH SOL XRP

Centralized Exchange (CEX) trading volumes for the top five traded tokens over the last 30 days.

Trading volumes over the last month have been consistently over the $500 million range for BTC/USD, a significant milestone given volumes in the last year have been generally low. The strong volume across the top five tokens (BTC, DOG, ETH, SOL, and XRP) brings support to the recent price increases over the last month, with the anticipation of ETF license approvals coming in December 2023 or January 2024.

DeFi DEXs

Amberdata API Decentralized Exchange (DEX) protocol from weeks 11/13/2023 and 11/20/2023. Uniswap v3 and v2, Sushiswap

Decentralized Exchange (DEX) protocol from weeks 11/13/2023 and 11/20/2023.

Digi Assets SS 5

Decentralized Exchange (DEX) number of liquidity events (additions or removals) over the last 90 days.

DEX liquidity has also been on the rise, with the number of deposit events (liquidity additions) far outnumbering withdrawal events (liquidity removals) over the last 90 days. The increase in DEX liquidity is a bullish signal that token holders believe that the benefits of locking tokens into a DEX (and the on-chain fees paid for this position) will have a higher return than holding or swapping tokens. It also signals that holders believe trading volumes will grow – and trading volumes are the source of yield for LPs depositing funds.

Amberdata API Decentralized Exchange (DEX) trading volumes over the last 90 days. LINK WETH USDC USDT WBTC wstETH

Decentralized Exchange (DEX) trading volumes over the last 90 days.

Since mid-October, DEX trading volumes have steadily grown for most tokens, especially for the main trading pairs USDC/WETH, WETH/USDT, and WBTC/WETH. The growth in trading volumes is a welcome return for LPs and DEXs alike and a good sign for the market.

DeFi Borrow / Lend

Amberdata API DeFi Lending protocol comparisons from weeks 11/13/2023 and 11/20/2023. AAVE Compound and MakerDAO

DeFi Lending protocol comparisons from weeks 11/13/2023 and 11/20/2023.

Amberdata API Aave v2 borrow volumes for the top 5 borrowed tokens over the last 30 days. DAI, USDC, USDT, WBTC, and WETH

Aave v2 borrow volumes for the top 5 borrowed tokens over the last 30 days.

DeFi borrowing has been facing some turmoil lately, with borrowed volumes falling well below October and early November highs. Given the price rises for main tokens like ETH in the last few weeks, it’s a surprise that borrow volume hasn’t increased more, as users could see a high return on holding tokens while leveraging stablecoins like USDC and USDT as collateral.

Amberdata API Aave v2 borrowing rates for the top 5 borrowed tokens over the last 90 days. DAI, USDC, USDT, WBTC, and WETH

Aave v2 borrowing rates for the top 5 borrowed tokens over the last 90 days.

Average borrowing rates have been fairly stable since the end of October, with rates typically increasing during periods of high borrowing activity. It’s likely that borrowers have reached a level where borrowing more funds and taking on additional risk outweighs the marginal benefits.