Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
In the past 48 hours, we have witnessed history together.
Global financial markets have suffered a multi-level waterfall. U.S. stocks were blown for two consecutive days, and yesterday experienced the biggest drop since 1987. The three major stock indexes closed down nearly 10%; this morning, the Asia-Pacific stock markets plummeted across the board, the South Korean stock market triggered a blowout, and Japanese stocks fell 10%. More than 4%, the blockchain sector fell 5.41% at the opening, and the Shenzhen Securities Blockchain 50 Index fell 5.27%. Even spot gold, which has been trending well recently, was sold off, and the price of gold fell sharply, falling below $1,560 today.
Recently, Bitcoin, which has been debated by everyone as "safe haven or not", is even more appalling. BitUniverse data shows that from 18:00 Beijing time yesterday, Bitcoin fell from US$7,300 to US$5,500 for a short period of time, a drop of 25%, and closed at US$6,100 at night; at 7:00 this morning, Bitcoin fell again, once falling to US$3,800. Then it rebounded to the $5,000 line.
As of press time, Bitcoin was temporarily reported at $5,216, a 24-hour drop of 28% (the largest drop was close to 50%), and other cryptocurrencies generally fell by more than 30% in 24 hours.
Contract users were hit hard. According to data from Coin Coin, in just half an hour from 18:30 to 19:00 yesterday, the total liquidation of the entire network was 565 million US dollars, and the number of people liquidated was 19,000+; in the past 24 hours, the total liquidation of the entire network exceeded 3.2 billion US dollars, a total of 1.16 Thousands of people have become victims of liquidation.
Under extreme market conditions, the "infrastructure" of the currency circle has also withstood multiple challenges. Mining machines have fallen below the shutdown price, frequent exchange downtime bugs, and large-scale liquidation of lending platforms... When the market was good before, all kinds of hidden mines in the industry that we turned a blind eye to have become the incentives for panic and stampede.
So when this epic "big test" comes, how will the vertical industry react, what answers are handed over, and what problems are reflected behind it?
For the upstream mining industry, although the computing power of the entire network has not declined, the shutdown price of the old mining machine S9 to the new model Antminer S17 has been quickly broken down, and many mining machines are mining at a loss. Once the currency price continues to fall, a large number of miners and mine owners may fall into liquidation in an instant.
The voices of complaints about exchanges are one after another today, showing abnormalities, delayed withdrawals, forced liquidation of empty orders, serious OTC premiums, contract pins... Although many exchanges issued announcements to explain the reasons, retail investors who suffered heavy losses did not pay.
The DeFi market is also deeply affected. The sharp drop in ETH has led to severe congestion on the Ethereum network, skyrocketing handling fees, delays in DEX matching, and centralized liquidation on decentralized lending platforms. Due to the extremely high positive premium, stablecoins have become a temporary residence for mainstream currency sellers to transfer their assets.
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The computing power is stable, but the "mining disaster" has arrived
We guessed the "mining disaster", but we never thought it would be in this way-before the bitcoin production is halved, the currency price will be halved first.
According to the data of Coinin mining pool, based on the current currency price of 5,000 US dollars and the electricity price cost of 0.38 yuan/kWh, the income of mining machines with unit power consumption exceeding 65W/T has all been negative, including the first-generation Antminer S9 Wait for the old model.
In addition, the high-performance new-generation mining machines S17 and M21S from manufacturers such as Bitmain and Whatsmart are also operating at a meager profit of a few cents to a few dollars, and even when the currency price hits 4,000 US dollars for a short time, they cannot make ends meet.
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Data as of March 13 at 10:30
As shown in the figure, the average computing power of the last day is higher than that of the last three days, that is, the computing power on March 12-13 is higher than that on March 10-11.
Let’s look at the self-owned computing power announced by each mining pool. The top 10 mining pools have experienced varying degrees of decline in computing power in the past 24 hours. Among them, BTC.com and Huobi.pool have suffered the most serious loss of computing power, which is close to 10%.
Roughly estimated, the top ten mining pools with 88% of the computing power of the entire network have lost a total of 3.28EH/s in 24 hours. Based on the computing power (15T) of Antminer S9, which is most likely to be shut down, the total shutdown of the entire network is 220,000 units, which is far less than the last mining disaster.
From November 15th to 25th, 2018, Bitcoin fell from US$6,500 to US$3,652 (a drop of 43.5%) in 10 days, breaking through the prices of various mining machines, causing the computing power of the entire network to plummet by 25%, 60~ 800,000 old mining machines were taken off the shelves. But this time, the price of the currency has fallen by a considerable amount, but the computing power of the entire network has not changed.
This seems to be a good thing, indicating that miners are optimistic about the short-to-medium-term currency price, and insist on turning on the machine even if they make a small profit or lose money, which also safeguards the security of the Bitcoin network as a result. But in the long run, this abnormality also has hidden worries.
First of all, let’s take a look at the current scale of “mining at a loss”.
Previously, several industry veterans told Odaily that among the 100E computing power at the end of 2019, 50E came from old mining machines at the 15TH/s level, and the remaining 50E mainly came from new mining machines at the 50TH/s level and above.
The basis for this estimate is that in October 2018, the computing power of the entire Bitcoin network reached a peak of 53EH/s, but since then, as the price of the currency plummeted, the mining machines continued to be shut down and taken off the shelves; It was only at the end of May that it rose back to 53EH/s. During this period, there were almost no mass production of higher-performance mining machines. Therefore, the computing power of about 50E is considered to come from old mining machines.
For this part of the mining machines, it is still profitable when the currency price remains above 45,000 yuan ($6,400). Judging from the currency price trend over the past year, before March 12, Bitcoin has never fallen below this point since May last year, which means that these old mining machines have not yet been shut down on a large scale.
The multi-level waterfall on the 12th and 13th broke through this point without warning. Many miners may not have recovered to take further measures, or they are still waiting for the currency price to recover.
In this regard, Biyin Mining Pool told Odaily that even if the miners decide to shut down, it will not be so fast in practice. For example, mining farms need to notify and solicit opinions from customers; secondly, many mining farms have declared electricity consumption to relevant departments, so it is inconvenient to shut down suddenly. For customers who cannot afford electricity bills, both parties may choose to temporarily lease the machine to the mining farm to continue run. For mine owners, their electricity cost will be much cheaper than that of customers, so it is not necessarily a loss to run the mining machine by the mine. If the electricity price is 0.24 yuan/kWh, there is still a few cents for the Antminer S9 to start up.
Veteran miner Achang also believes that not turning off the machine means that there is no time for large-scale losses. At this time, the electricity bill of the old miner that is still online is only a few cents.
However, if some miners are unprofitable or even losing money, mining in debt, it is not wise before the uncertain currency price and the upcoming halving of production.
Assuming that the currency price falls further in the near future, these mining machines are likely to suffer losses overnight and have to be taken off the shelves immediately, resulting in vacant positions and inability to consume electricity, etc. In the situation of selling assets. And for those miners who have mortgaged loans because they are reluctant to sell, or have been struggling for many days and their cash flow has been tight, the fluctuating currency price is a sword of Damocles falling at any time.
Even if the currency price can maintain stability or even rebound slightly in the near future, the halving that arrives on time in two months will make these old mining machines "unprofitable".
The old mining machines are still stubbornly resisting, not to mention the 50-60 W/T level new mining machines that have been in service for less than a year and are far from paying off, even though their daily income is less than 10 yuan.
On the other hand, even if miners intend to sell their machines, can they easily find so many buyers at this time?
At the moment when the global economy is under water, it may be the best policy to seize certain and stable income, and it is also the common choice of most investors. Therefore, for miners who have lost cash flow at this time, it may be the best choice to preserve their strength and prepare for a worse situation.
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The exchange response under the plunge, the USDT premium, and the loss of the contract
Every time there is an extreme market, it is a big test for the exchange.
On the one hand, it is a test of technical strength. The sharp rise and fall will prompt a large number of users to flood the platform for trading operations. Excessive traffic in a short period of time may easily cause congestion or cause transaction engine failures.
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(Huobi OTC cannot trade USDT for a short time)
After the failure occurred, the exchanges also responded immediately. At 21:00 last night, Huobi issued an announcement saying that the congestion problem had been solved through capacity expansion, and user transactions had returned to normal; other companies also issued announcements one after another saying that the failure problem had been resolved.
Although, many old users are not surprised by the "process" of "extreme market conditions → exchange downtime → return to normal after emergency repair". But compared with the traditional trading market, this "currency market normality" obviously should not be taken for granted. Exchanges still need to continue to improve their technical strength and expand throughput performance to ensure that users can still trade normally under extreme market conditions and their interests will not be damaged.
On the other hand, it is to test the depth of the transaction. From the three perspectives of spot, delivery contract and perpetual contract, Odaily counted the lowest price of BTC on the three major exchanges under the plummeting market, as follows:
The lowest BTC spot price: Huobi (3800 USDT), OKEx (3791.9 USDT), Binance (3782.13 USDT);
The lowest price of BTC/USD contract this week: Huobi (3686.81 USD), OKEx (3677.89 USD);
The lowest price of BTC perpetual contract: OKEx (3728.8 USDT), Binance (3621.8 USDT);
Among them, Huobi performed well in spot and weekly delivery contracts; OKEx performed well in perpetual contracts, but the spot performance was mediocre; Binance perpetual contracts and current prices deviated significantly in a short period of time.
In addition, some users also reported that ERC20-USD on Huobi and Binance cannot be withdrawn, causing panic: the exchange has inflated USDT, and now it is facing a redemption crisis, and USDT may be thundered.
In this regard, Qi Ye, CEO of Huobi Global Station, said that the blockage of the Ethereum blockchain caused the inability to withdraw cash. "Huobi has not stopped withdrawing coins, and there are no data errors or so-called hackers. Affected by violent market fluctuations, the ETH network has experienced serious congestion, and the deposit and withdrawal of ETH and related ERC20 series currencies have experienced huge delays. There are 110,000 pending transactions on the entire network in the stage of packaging. After the ETH network returns to normal, the deposit and withdrawal speed of related currencies will also return to normal. Please wait patiently. It is recommended to choose Omni-USDT for USDT withdrawals. "
In addition to "no cash withdrawal", USDT also has a large positive premium this time. Affected by the falling demand for hedging, investors have exchanged cryptocurrencies such as Bitcoin for stable coins, prompting the USDT premium to reach as high as 14.29%, a record high. In the Huobi OTC trading area, USDT’s off-exchange quotation once exceeded 8 yuan, and it has recovered to 7.46 yuan as of press time.
At 1:27 a.m. Beijing time today, Tether newly minted and printed 60 million USDT. Bitfinex CTO Paolo Ardoino said: “This is an authorized but unissued transaction (not a real additional issue), which means that the amount will be used as inventory for the next issuance request (i.e. a reserve for the next additional issue). Afterwards, at 3:27, Tether printed another 30 million USDT.
Compared with spot players, contract users suffer a lot.
According to Coin data, in just half an hour from 18:30 to 19:00 yesterday, the total liquidation of the entire network was 565 million US dollars, and the number of liquidated people was 19,023; in the past 24 hours, the total liquidation of the entire network exceeded 3.2 billion US dollars, a total of 116,000 People became victims of liquidation, and the largest single ratio liquidation occurred in Huobi, with a position value of 58.32 million US dollars.
After this round of bear crushing, the BTC holdings of the entire network dropped sharply by 32% in the past 24 hours, and it is currently reported at 1.46 billion US dollars.
OKEx trading big data shows that the long-short ratio of BTC leverage has dropped to 0.15, a new low this year. Prior to this, the long-short ratio of BTC leverage once rose to 32, a record high.
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Ethereum Plunge Tests DeFi Market
The slump in the cryptocurrency market has also triggered a liquidation wave in the DeFi market. The slump of ETH once caused serious congestion in Ethereum, which in turn led to a delay in DEX matching, a short-term surge in gas fees, and a positive premium for stablecoins to varying degrees. As of press time Before, DAI had a premium of 3.48% compared to USDT.
However, most DeFi platforms have taken emergency measures to deal with this. MakerDAO announced today that it will start auctioning MKR to repay $4 million in bad debt. As of press time, Paradigm, the owner of MakerDAO, and Dharma, a DeFi lending platform, have announced their participation in MakerDAO's MKR auction. The derivatives trading platform dYdX announced that it will increase the minimum transaction volume on the platform to 25 ETH/5000 DAI in response to excessive gas fees.
According to DeFi Pulse data, as of press time, the total lock-up volume of DeFi has dropped to 610 million US dollars, and the single-day lock-up volume on March 12 alone has decreased by 200 million US dollars. According to this year’s highest lock-up volume of 1.23 billion US dollars has 50% reduction. However, the decrease in the total value of DeFi locked-up assets is mainly due to the halving of the prices of mainstream currencies such as BTC and ETH, not due to the sudden decrease in the assets mortgaged by users.
According to debank.com data, as of press time, the total liquidation amount of the DeFi lending platform exceeded 23.3 million US dollars on March 12, and the total liquidation amount reached 5.24 million US dollars on March 13, with a total liquidation of nearly 30 million US dollars in two days.
Based on the analysis of the data on March 12, MakerDAO had the highest liquidation amount of USD 5.95 million, accounting for 37% of the total DeFi liquidation amount; Compound liquidation amount was about USD 4.81 million, ranking second in the liquidation scale; dYdX liquidation amount was about USD 3.73 million, The liquidation scale ranks third.
On the other hand, the plunge also caused severe congestion in Ethereum. According to DApp Total data, at around 9:00 p.m. on March 11, the one-hour Ethereum transfer fee was 24.19 ETH, and at 9:00 p.m. on March 12, the one-hour Ethereum transfer fee reached 355 ETH. Daily increase of 15 times.
According to the Ethereum browser etherscan.io, the number of pending confirmation transactions on Ethereum has doubled. On the evening of March 12, the highest number of pending confirmation transactions reached 123,661, and then eased slightly. Currently, there are 78,763 pending confirmation transactions.
Excessive gas fees even caused MakerDAO's oracle price feed system to hang for a while.
In order to deal with the high gas fee, dYdX founder Antonio Juliano immediately gave a solution on Twitter: On the evening of March 12, Antonio announced that the minimum transaction volume on dYdX will be increased to 10 ETH/2000 DAI, while the average user Positions still have no volume limits, and stops continue to function normally. As the decline in the cryptocurrency market continues to widen today, Antonio said on Twitter this morning that he will continue to increase the minimum transaction volume to 25 ETH/5000 DAI.
MakerDAO officially announced yesterday that it will launch an executive vote to adjust parameters on March 13 (today). The proposed adjustments focus on auction parameters and guarantee that the price of Dai will be pegged at $1. Some adjustment parameters include: Sai stable fee rate reduced from 9.5% to 7.5%; Dai stable fee rate reduced from 8% to 4% (applicable to ETH and BAT); Dai deposit rate difference reduced to 0, which will make the deposit rate ( DSR) is set to 4%.
The biggest problems brought about by this market crash to the DeFi market are mainly large-scale liquidation and network congestion. The reason for the congestion is more due to the performance problems of Ethereum itself, and has little to do with the upper-layer applications built on Ethereum. Conversely, the DeFi market will also affect the development of the entire Ethereum and the value of ETH. After all, DeFi lock-up assets account for about 10% of the market value of ETH. Once the DeFi market falls this time, the value of ETH will shrink. Fangfang will also lose a very important application scenario in the future.
At the beginning of this year, the expectation of the "halving year", the continuous introduction of favorable policies in various countries, and the fact that the digital currency market has stepped out of the independent market compared with the traditional financial world are all raising traders' optimism. However, in just a few days, with the virtual currency falling across the board, the market sentiment turned sharply, causing a certain degree of stampede and a lot of panic.
Perhaps, for a new market that has just been ten years old, it takes several black swans to accelerate its maturity. I hope that the disaster recovery capabilities and risk control levels of traders and practitioners can also stand the test of the system.
