Well, it’s over.
Celsius disabled withdrawals, staked ETH is losing peg, and the devs over at COPE market sold their team allocation effectively nuking the price to 0.
Welcome to a crypto bear market, where scammers are exposed, soft rugs become rug rugs, and the only people left are the people that are going to make it next cycle.
If you’re here, welcome to the first edition of Mafia Mondays, a weekly newsletter we’ll be sending out giving you coverage of what went on in markets, CT, and actionable pieces of advice preparing you for the next bull run.
Where have you guys been?
When we started, it was just a side hobby for the three of us that was simple as:
”Hey, we talk about crypto in Discord 16 hours a day, maybe we should record it”
What began as a hobby has gained way more traction than anticipated, and we decided a few weeks ago to truly go all in on pushing out and creating the absolute highest quality content for you all on a more consistent schedule.
So, a quick overview on our new weekly content output before we dive into the newsletter:
- Sundays – Weekly Charts + TA YouTube Series with DeFi Mafia: Featuring Adrian and Mike
- Mondays – Mafia Mondays newsletter
- Wednesdays – Weekly Analysis Series w/ David Gil
- Fridays – DeFi Mafia Podcast
For the newsletter we didn’t want this to become just another bland ‘news’ 5 second scroll thru piece.
We’ll play around with the formatting, but structure wise we’ll follow something like this to start:
- Weekly round-up – General summary of the past week
- Market overview – Technical Analysis covered in-depth in our TA YouTube series
- Top News Stories – hand-picked and focused on the top news pieces of the week
- Read of the week – Any thread, article, research report etc. we think might be worth your time to deep dive
- Featured Substackooor/Threadooor – There are tons of tremendously skilled anon writers on CT. We want to help give exposure to up-and-coming writers in crypto while helping you curate your Twitter following each week.
With all that being said, let’s get into the first edition of Mafia Mondays!
Weekly Round-up: Celsius Insolvent?
First, imagine receiving that e-mail with any sizable amount of money in Celsius.
Second, the fact something of this magnitude is occurring right after UST collapsed is a horrible look for this industry.
Retail continues to get screwed, and as @altcoinpsycho referenced:
“If you don’t know where the yield is coming from, you are the yield”
The Celsius TLDR:
- Celsius accepts various crypto deposits such as BTC, ETH, USDC, and other coins, then deploys these assets within various DeFi protocols to generate yield for users
- One of the biggest positions Celsius holds is stETH, which is a liquid synthetic token issued by Lido 1:1 for each ETH a user stakes on their platform
- Because ETH V2 has not yet launched, all ETH staked on their Beacon Chain is locked and not able to be liquidated
- stETH however can be, thus many users began selling off their stETH to gain liquidity
- Celsius was relying the stETH:ETH peg remaining close to the same price and borrowed heavily against their stETH position
- If the stETH price drops enough vs ETH then Celsius could face liquidation
- This risk caused panic from depositors who began withdrawing funds and forced Celsius to pause all withdrawals to avoid a bank run as of Sunday
In addition to Celsius potentially going insolvent and nuking the rest of the market with them, Do Kwon apparently pulled ~$80 million dollars before UST collapsed, and the police in South Korea are beginning to investigate employees for embezzlement.
Whether this is true or not is TBD, but still — not a good look.
More bad news as it seems every protocol is miraculously breaking with Osmosis, the superfluid staking protocol on the Cosmos ecosystem getting hacked.
Optimism, who was supposed to kick-off the exodus from L1s back to L2s, had their momentum blown by their partner Wintermute.
Wintermute had agreed to be the primary market-maker for $OP and were sent 20 million tokens to a multisig. Wintermute made a mistake and was not able to access the tokens, and in the process of trying to recover them an attacker was able to steal them away.
Crypto has never been in a macro environment like this before, nor have we had as many working products and teams building.
The stress limits are getting put to the test, and while it’s easy to call out protocol collapses, dev teams pulling funds, and malicious hacks, the positive spin on this is that there are more products + protocols not breaking, even in the most hostile of environments.
When the markets do turnaround, there will be more confidence than ever in the teams that make it out on the other side.
We’ll be covering new protocols each week in our new series below so make sure to check it out and learn how to analyze projects like the Mafia.
From the Mafia
While Celsius could be to blame for the recent downward price action, BTC has been tracking to NASDAQ with a ~ .88 — .92 correlation.
With a simple overlay, we can see this to be true.
It’s tough to call bottom at these levels with the macroeconomic uncertainty across Japan, U.S. credit, and quantitative tightening in full effect for the next three months. With poor CPI reports and FOMC this week, markets are not looking fantastic.
BTC areas of interest would be at the following levels:
- 24K (Where we’re at now)
Top News Stories:
- Celsius Liquidity Crisis
- Nexon (Maplestory) venturing into Game-fi
- Jai Bhavani, co-founder of Rari Capital, is stepping down
Read of the week: Multichain Architecture
Avalanche subnets, Polygon supernets, Cosmos IBC, even BNB has its own version of appchains.
But what does all of it mean, and why is it important?
This article by @shanav_m, VP at Jump Crypto is an in-depth and un-biased explanation of the differences between all the different architectures being built.
The L1 narrative may or may not be dead for next cycle, and we want to highlight this piece because it’ll help you gain a better understanding of the proposed solutions for alternative L1s versus ETH L2 scaling solutions.
We’ll build on this next week diving more into ETH L2 and ZK rollup fundamentals. For now this is a great starting piece as well as any other research reports by Shanav.
Recently accepting an Analyst role at ProximityFi, Res has been pushing out some of the best content on CT with a heavy focus on the Near ecosystem and stablecoins.
Justin Sun even took the time to go back and forth with him on Twitter.
This week we covered:
- Celsius imploding
- Optimism exploit
- New content series and newsletter segments
Things to look out for this week:
- FOMC June 15th
- stETH peg
- DeFi Mafia’s TA Series
As always, if you enjoyed the content make sure to check us out on our other channels, and we always appreciate any shares on Twitter!
See you next week.