Month: March 2023

DeFi Protocol Hacked, Token Still Outperforms US Bank Shares

15. March 2023

• This article compares the market reactions of Euler’s EUL token and First Republic Bank’s stock following respective protocol hacks and U.S. bank turmoil, respectively.
• Euler Finance experienced a flash loan exploit that caused its token to fall by 50%, while First Republic shares fell 62% due to the collapse of two crypto-friendly banks.
• Despite the major losses suffered by Euler, FRC was punished more severely by traders, demonstrating how investor sentiment can be more influential than actual market events.

Market Reactions

This DeFi Protocol Just Got Hacked but Its Token Is Still Doing Better Than a Major U.S. Bank’sEuler’s EUL token fell 50% hours after an exploit on its protocol while First Republic shares fell roughly 62% following U.S. bank turmoil.

Euler Finance Hack

An attacker used a flash loan to plunder nearly $200 million from Euler Finance, a permissionless protocol that facilitates crypto lending and borrowing. Holders of euler (EUL) had their tokens cut in half as a result of this attack, demonstrating that no matter how bad things get somebody always has it worse.

U.S Bank Collapse

First Republic Bank (FRC), which has been around for nearly 40 years, saw its stock plunge 62%. This came after Wall Street digested the collapses of Silicon Valley Bank (SVB) and Signature Bank which both did business with crypto companies, leading to many investors fleeing for safer havens such as Bitcoin and Ethereum instead.

Investor Sentiment Influential

Despite the fact that First Republic has not defaulted or gone insolvent or been seized by the government – in fact it raised $70 billion over the weekend to shore up its liquidity – traders punished FRC shares more severely than EUL which had just lost hundreds of millions in value with little chance of getting it back.. This demonstrates how investor sentiment can be more influential than actual market events when it comes to asset prices moving up or down.

Crypto Market Reaction

Elsewhere in the stock market, assets mostly traded sideways by the session’s close; however in cryptocurrency almost every asset rallied following news that all depositors would be made whole again further highlighting investors’ confidence in digital assets during times of uncertainty or crisis situations .

Silvergate Bank: Crypto Biz Soars then Crashes

7. March 2023

• Silvergate Bank lost over $8 billion in deposits from its crypto customers at the end of 2022.
• The bank’s own data shows a rapid acceleration of its novel crypto-banking business, as well as how it was vulnerable to the industry’s drama.
• Silvergate’s data showed that the volume on its Silvergate Exchange Network and overall asset size peaked in 2021, before sliding in 2022 due to crypto sector dramas.

Silvergate Bank’s Crypto Business

Silvergate Bank is a La Jolla, California-based lender that experienced significant financial losses due to cryptocurrency-related events in late 2022. Its own data reveals that the bank had been rapidly expanding its digital assets business prior to this dramatic downturn. Furthermore, the bank has been subject to investigations by regulators and the U.S. Department of Justice, with ongoing audits expected to require restatements of its financials.

Volume High Point

The volume on Silvergate’s Silvergate Exchange Network hit a high point in early 2021, reaching $406 billion in transfers throughout the first half of the year before dropping to $230 billion by late 2022. Similarly, the bank’s overall asset size peaked at $16 billion during fourth quarter 2021 before declining to $11.4 billion according to its most recent report – still relatively small compared with mid-range community banks.

Regulatory Pressure

Silvergate has faced pressure from U.S banking watchdogs who have warned against such institutions concentrating their efforts on cryptocurrency activities – warnings which have since become reality for Silvergate and many other banks within this sector.

Implosion of Industry

The implosion of cryptocurrency industry caused a sudden evaporation of most deposits held by Silvergate – one risk among several identified by regulators which eventually came true for this specific bank institution .

Conclusion

Although Silvergate saw tremendous growth between 2020 and 2021 regarding digital assets banking and exchange network activity, it also became increasingly vulnerable as regulatory pressures mounted and industry drama unfolded towards late 2022 . As such ,the bank ultimately lost billions from customer withdrawals despite reaching peak performance at points throughout 2021 .