One dollar token was worth 0.85 euros a year ago, and now it’s worth exactly 1 euro. So, for HODLers of the greenback planning on taking a vacation in the Italian countryside, they can now do so 15% cheaper than they could a year ago.
"The good news is that a competitive dollar in the global market and a strong dollar at home are compatible in both the long run and during the transition to a more competitive dollar."
— Martin Feldstein
King Dollar
The tokenomics of USD coin — commonly referred to as the US dollar — have been very favorable.
One dollar token was worth 0.85 euros a year ago, and now it’s worth exactly 1 euro. So, for HODLers of the greenback planning on taking a vacation in the Italian countryside, they can now do so 15% cheaper than they could a year ago.
A warning: Travelers who attempt to swap their USD coin for euro tokens at the airport may be subject to impermanent loss.
Why has the US dollar been mooning? Well, the Federal Reserve has been burning USD tokens via quantitative tightening (QT) — at the same time, it has aggressively raised interest rates to incentivize investors to stake the Dollar network.
This rise in the US Dollar Index resembles the sustained surge in 2014, as commodity prices fell sharply and the Fed began to taper (stop increasing) its balance sheet:
But during 2014, the worst performing currencies against the dollar were not those in the US Dollar Index but rather emerging market currencies such as the Brazilian real, the Russian ruble and the South African rand.
This time, however, some of the worst performing currencies are in the US Dollar Index itself, not only the euro but also the Japanese yen:
It has been a true winter for yen HODLers, as the Bank of Japan has sacrificed the currency to defend its bond market. Subpar tokenomics.
The Fed Has To Choose
In the Fed’s FOMC meeting on July 27, will the regulator hike the Fed funds rate by 75 basis points or by 100 basis points? The market can’t seem to make up its mind:
A Serious Question
If most investors are terrified, why is the VIX at 26?
There were times when a high inflation print would cause the “fear index” to spike to the mid-30s, but yesterday’s CPI reading of 9.1% barely registered, with the VIX failing to exceed 30.
The S&P 500’s slow and gentle fall this year has had a tranquilizing effect, no doubt, but the degree to which investors remain uninterested in buying protection is very striking:
Sticker Shock ⚡
The price of electricity in France has skyrocketed:
Move aside, Dogecoin and GameStop: There is a new player in town.
Despite on-chain activity slowing down over the past few months, several projects have continued building through the bear. (thread) — Blockworks Research
Multicoin Capital has secured $430M to invest in crypto startups. These are 9 areas they're investing on (thread) — Blockworks
A list of some of the most interesting early-stage projects (thread) — Bursting Bagel
Time for my weekly thread on notable DeFi stats from the past 7 days. (thread) — Patrick Scott
This is a pretty awesome token standard with great implications for DeFi as it lays the foundation for unique loans and structured products (thread) — Eric Nemeth
