DeFi protocol Pods has raised US$5.6m in seed funding to create structured products for crypto-assets. The financing round featured investors such as IOSG, Tomahawk, Republic, Framework Ventures, and others.
The first strategy on Pods Yield is stETHvv (Ethereum Volatility Vault), a low-risk product focused on Ether accumulation which combines Lido’s yield with weekly strangles to earn more every time the Ether price bounces up or down.
Currently, Pods platform users can deposit Ether and stETH into the vault stETHvv (short for stETH Volatility Vault) and be exposed to a low-risk, complex-to-execute strategy in one click.
We are not only generating results but have developed a range of products dedicated to assisting DeFi protocols - Rafaella Baraldo, Pods
‘We have talked to hundreds of stakeholders to understand their needs and improve our platform according to their feedback. Recently Pods did four security audits on its Pods Yield product, two of them with OpenZeppelin in November and December 2022,” said Rafaella Baraldo, founder & CEO of Pods.
‘We are not only generating results but have developed a range of products dedicated to assisting DeFi protocols to diversify their treasury into low-risk strategies, making their treasury strategy more resilient.’
The firm is seeking to take advantage of opportunities to set up automated derivatives strategies independent of liquidity mining. Risk and return analyses are transparent and quantitative.
‘Today, most DeFi yield strategies depend on liquidity mining campaigns, incur a hard-to-estimate risk, and most use spot markets,’ said Baraldo.
‘As opposed to CeFi lenders. Pods Yield is a series of open-source smart contracts that algorithmically runs a known investment strategy, receive deposits, and process withdrawals.’
CME reports 82% increase crypto ADV in 2022
2022 was a rough year for crypto. Events like the Terra (Luna) crash, the losses on Celsius, the Three Arrows Capital collapse, and the FTX-Alameda scandal left many investors scarred and have undermined the general confidence in blockchains and cryptocurrencies, however, development and innovation have continued.
The Chicago Mercantile Exchange (CME) has reported that the average daily volume (ADV) of cryptocurrency futures and options in 2022 rose 82% year-on-year, said CEM on 4 January without disclosing the number of contracts.
The Micro Ether futures ADV reached a record high of 19,582 contracts, the bourse noted. In Q2 and Q3 of 2022, the ADV of cryptocurrency futures and options came to 57.4K and 56.2K contracts on CME, respectively.
Exchange-wide, CME reported record ADV of 23.3 million contracts traded in 2022, an increase of 19%. Equity index ADV grew 39% for the year and 26% in Q4. Interest rate ADV up 18% annually, driven by record SOFR volume and open interest. In addition, the ADV in Q4 reached the highest ever.
New Venture offers ethereum staking yields with limited downside
Ether staking specialist MetaWealth Technologies and PowerTrade, a liquidity provider for digital asset-based derivatives have launched a novel investment product designed to offer institutional crypto investors a customised mechanism to gain exposure to cash-settled future trades and staking options blended for individual portfolios.
The structured product aims to deliver market-neutral like returns via hedging against staked ether – the structure uses liquid ether staking as collateral for put options, which are bundled together on a four-month rolling basis.
The aim is to earn passive, yield-bearing income from the staking, while hedging the exposures with options designed to provide downside protection. The bundling is intended to shop around in bulk from various market makers in an effort to lock in better pricing.
The product is designed to act as a buffer against drawdowns as extreme as 90%, via a combination of interest rate swaps and derivatives, according to MetaWealth CEO Florian Drummen (right).
The product is targeted at digital asset-focused hedge fund firms and fund of fund operators seeking to protect their investments another worst-case scenario.
A series of pilot test-runs are now underway, with the aim being to ink deals with about 10 funds by the end of the first quarter of 2023.
Israel proposes to classify ‘digital assets’ as securities
The Israeli Securities Authority (ISA) has proposed a series of legislative changes on digital assets in a public consultation that will end on 12 February.
‘Where a digital asset is a financial investment, it will be treated as a security. The aim is to provide greater clarity about which digital assets are regulated by the ISA, and to prevent areas where investments are unregulated because of definitional issues,’ stated the regulator.
Regulatory efforts have accelerated as a result of cryptocurrency collapses such as FTX and Israeli-linked Celsius. The new guidelines are part of a roadmap for digital assets regulation published by the Ministry of Finance in November 2022.
Y2B introduces protocol to allow users hedge, leverage and speculate
Singapore-based Y2B Finance, which offers a suite of structured products designed for exotic peg derivatives, aims to enable investors to hedge or speculate on the risk of a particular pegged asset (or basket of pegged assets), deviating from their fair implied market value.
The Singapore crypto firm has rolled out a protocol offering three main products: typhoon, volcano and wildlife.
The typhoon structure leverages a variant of the ERC-1155 standard for the creation of fully-collateralised insurance vaults; volcano is a collateralized debt obligation (CDO) powered lending market for pegged assets with maximal extractable value (MEV)-proof liquidations; and wildlife is an on-chain request for quotes (RFQ) orderbook where users can trade Y2B risk tokens amongst themselves, both unlocking liquidity and allowing for repricing of semi-fungible tokens.
Amber secures US$300m series C investment
Amber Group, a Singapore-based digital assets firm and an active issuer of structured products, has completed a US$300m series-C round, led by Fenbushi Capital US and other crypto-native investors and family offices.
‘Prior to the collapse of FTX, Amber was in the process of completing an extension to our Series B+ at a US$3 billion valuation in preparation for a potentially prolonged crypto winter. Post the FTX collapse, we paused after a partial closing and instead moved forward on Series C,’ stated the firm.
Less than 10% of Amber’s total trading capital was with FTX at the time of its collapse which forced the firm to rebalance some positions.
US agencies warns of crypto-asset risks to banking organisations
Federal bank regulatory agencies issued a statement on 3 January highlighting key risks for banking organisations associated with crypto-assets and the crypto-asset sector.
In particular, the statement describes several key risks associated with crypto-assets and the crypto-asset sector, as demonstrated by the significant volatility and vulnerabilities in the crypto market over the past year.
‘Given these risks, the agencies continue to take a careful and cautious approach related to current and proposed crypto-asset-related activities and exposures at banking organizations,’ stated the announcement.
‘The agencies continue to assess whether or how current and proposed crypto-asset-related activities by banking organizations can be conducted in a manner that is safe and sound, legally permissible, and in compliance with applicable laws and regulations, including those designed to protect consumers.’
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