{"id":8139,"date":"2022-06-28T21:12:21","date_gmt":"2022-06-28T15:42:21","guid":{"rendered":"https:\/\/aayushbhaskar.com\/?p=8139"},"modified":"2022-07-10T18:00:51","modified_gmt":"2022-07-10T12:30:51","slug":"crypto-chaos-celsius-3ac-and-solend","status":"publish","type":"post","link":"https:\/\/aayushbhaskar.com\/crypto-chaos-celsius-3ac-and-solend\/","title":{"rendered":"Crypto Chaos: Celsius, 3AC And Solend","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"
The Crypto Market has been rocked by chaos in the last few weeks. <\/span><\/p>\n
No, I am not talking about the general crash in prices across the board. Instead, I am referring to the issues that have cropped up in one segment of the Crypto space – DeFi. <\/span><\/p>\n
One by one, protocols are failing and going under. Some have stopped withdrawals. Some have failed to meet margin calls. Whereas others have suspended the very features that were their USP. <\/span><\/p>\n
The list is long, but let’s focus on some of the major developments with respect to Celsius, 3AC & Solend.\u00a0<\/span><\/p>\n
This article is for anyone interested in better understanding the risk and reward structure of the Crypto markets<\/a>. Also, it will give you a keen understanding of systematic risk and how Crypto is still not detached from our TradFi world.\u00a0<\/span><\/p>\n Systematic risk is a risk that cannot be mitigated by holding a well-diversified portfolio. In its simplest sense, it is the risk that emanates from the system in which we operate. <\/span><\/p>\n Hence, it can only be absorbed. <\/span><\/p>\n Think of interest rates, the fiscal deficit, and estimates of economic growth. <\/span><\/p>\n No firm, sector, or market can be spared if interest rates increase, the fiscal policy becomes contractionary and economic growth slows down. Overall business sentiment and performance will suffer. <\/span><\/p>\n This will in turn be reflected in the market prices of stocks<\/a> and other assets.<\/span><\/p>\n Notwithstanding the thought-provoking arguments put forward by Bitcoin Maxis, the state of play that exists today is that the Crypto market is heavily impacted by the health of the economy. <\/span><\/p>\n With inflation a concern, stocks have taken a beating, and bond yields increased, reflecting an increase in the required return on capital on an inflation-adjusted basis.<\/span><\/p>\n With monetary tightening underway, analysts expect the bearish trend in these markets to continue.\u00a0<\/span><\/p>\n When you look at Crypto, the same situation persists. The rising cost of capital, which is becoming increasingly scarce due to higher interest rates, has negatively impacted the markets. <\/span><\/p>\n Gone are the days of free money from stimulus cheques being invested in $Doge<\/a> or swiping your card on a CEX to make a play at $BTC futures<\/a>. <\/span><\/p>\n The average individual is concerned about job security and as a result, staying away from the markets. Consequently, liquidity is drying up.\u00a0<\/span><\/p>\n1. Define Systematic Risk?\u00a0<\/b><\/h2>\n
2. How Does Systematic Risk Impact Crypto?\u00a0<\/b><\/h2>\n
3. The Trigger Event<\/b><\/h2>\n