Cardano Spotlight: Bitcoin ETFs, Fluid Tokens, and USDC

Author

Utsav Sheth
January 19, 2024

Hi,

What’s Spotlight? Every week, we highlight the most interesting events happening around Cardano. We want to help you cut the noise and find the signal.

Bitcoin ETFs are a landmark moment for crypto, but what is its impact? We then highlight Fluid Tokens and then move to discuss the pros & cons of USDC on Cardano.

Bitcoin ETF Inflows

The past week was a historic moment for our industry. A Bitcoin Spot ETF, a project that was 10 years in the making, was listed on Nasdaq. The first application was made by the Winklevoss twins in 2013!

The Bitcoin ETF provides open access to the institutional capital in the USA. It's key to note that access doesn’t mean demand. However, it's an undeniably bullish event that Bitcoin has found acceptance in the mainstream after spending decades hiding in the shadows.

Bitcoin ETF success?

Bitcoin plummeted from 49K to nearly 40K during the event. However, judging the event based on the price action alone is unfair. Blackrock’s IBIT and Fidelity’s FBTC hit $1B in AUM each. This makes them one of the fastest in the ETF world to hit $1B in inflows!

The total AUM of bitcoin ETFs has now crossed silver, which makes it the biggest commodity ETF after Gold.  In the aftermath of Bitcoin Spot ETF, two important things to consider:

• GBTC: GBTC was considered the “widowmaker trade,” where several institutions bought GBTC on leverage to capture the discount on the asset. This cast death for the likes of 3AC, Celsius, and more. It's unclear how many of those assets are still held at GBTC, but it has certainly had an effect on the market.

• Digital Assets: A bitcoin ETF opens the door to more types of instruments being legalized and listed on tradfi venues. We have already seen applications for BTC options and different forms of leveraged BTC ETFs. The most pressing one is ETH, which can further solidify the path for other digital assets.

In all scenarios, a successful Bitcoin ETF adds legitimacy to the industry, enables easy access, and provides attention and flow.

Learn more: What does Bitcoin ETF approval mean for Cardano

Fluid Tokens

With this segment, we aim to highlight Fluid Tokens, which has been building on Cardano since Mar’22. We discuss the project utility, LBE, and their roadmap.

Product:

Fluid Tokens is a lending & borrowing product that has evolved to create multiple products. Its core product is the lending protocol, which allows users to loan out Ada against NFTs and tokens. The project has done ~14M Ada volume to date!

They have released two more products - Rent & Boosted Stake. Rent allows users to rent NFTs, which is quite useful for utility-based NFTs like Tappy. Users looking to utilize products like TapTools Pro can rent the NFT for a price much lower than the floor price.

Second is Boosted Stake, where users can borrow Ada staking rights for ISPOs, airdrops, and more. This is unique to Cardano’s staking model, where a user can buy the rights to Ada staking without controlling the underneath Ada. This allows for borrowing Ada at high leverage (100x) without liquidation.

Token & Roadmap:

Fluid has been running its ISPO for several months and has finally launched its token, FLDT, on 19th Jan. The launch raised over 8M ADA through its LBE program, giving the community fair access to the token.

The two most exciting things for the roadmap are their expansion to other chains like Milkomeda, Ethereum, other EVM chains, Midnight, and Web2. It will be interesting to see Fluid grow!

Learn more: Boosted Stake

USDC on Cardano

USDC is the second biggest stablecoin deployed over 15 chains and has a marketcap of $25B. USDC is considered the king of DeFi due to high preference from onchain participants. The past week, the community has been discussing bringing USDC to Cardano. The key blocker here is paying Circle to integrate USDC, which could be in 8 figures.

The “For USDC” argument is -

  1. Cross-chain: USDC and its interop tech can open the gates of Cardano to the broader crypto ecosystem. This can’t be assumed since chains like Polkadot, Near, Flow, and Hedera have <$15M USDC issued since the launch of native USDC.

  2. Reliable Stable: The current stablecoins on Cardano don’t offer stability or scalability. A reliable stablecoin for Cardano is long due!

The “Against USDC” argument is -

  1. Blacklist - USDC is a centralized stable where Circle has the authority to freeze your coins. A lot of Cardano users find it antithetical to the essence of Cardano.

  2. USDM - Mehen is a home-grown brand that has had trouble raising from the Cardano community. It would be contentious to support a bigger brand for 10s of millions but not funding Cardano-native projects.

Both arguments have merit, and it's inevitable that if Cardano grows to heights, Circle and the rest would have to integrate it. In a world where we can afford to support local and big brands, a USDC integration would be a no-brainer and purely additive.

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Newcomers crying about -20%, me who saw the FTX crash:

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