The cryptocurrency market has been subject to extreme volatility over the past few weeks. The price of digital assets has fallen sharply. The entire market cap has fallen below $1 trillion, surpassing the $3 trillion mark at the peak of the bull cycle.
Being an emerging market means that high volatility is common in this growth phase. That said, this volatility makes cryptocurrencies so attractive to investors and speculators. However, volatility doesn’t always mean a significant upside, but also a significant downside.
That’s what we’re seeing in the fourth crypto cycle, so all this carnage isn’t unprecedented. In fact, a 70% to 80% drop in the price of bitcoin and ether from their all-time highs can be seen as a golden “buy blood” opportunity to plan for the future, focus on research, and only invest in what you can afford to lose.
However, we have also witnessed the sharp drop in cryptocurrency prices this time around, exacerbated by the lack of proper risk management practices by some of the biggest names in the industry.
extreme market conditions
Celsius Network, one of the largest centralized lenders in the crypto space, was among this batch of bad news as it suddenly froze customer withdrawals, swaps and transfers between accounts in what it called an “extreme market”. condition”.
The suspension of withdrawals has led to greater volatility and raised concerns about Celsius’ solvency. According to experts, it is a liquidity problem, a typical banking problem.
Just late last year, Celsius Network raised $400 million in a Series B round at a valuation of $3.5 billion. Back in October, the cryptocurrency lender had $25 billion in assets from more than 1.7 million users, which fell to around $11.8 billion as of last month.
In addition to spooking investors and markets, it has also caught the attention of governments and lawmakers during times of economic uncertainty, including high inflation and instability in global markets.
State securities regulators in Washington, Alabama, Texas, Kentucky and New Jersey now investigation Celsius Network this week suspended customer redemption decisions.
It is expected that the regulations proposed by the Presidential Working Group to regulate stablecoins may be extended to the entire crypto space to “reduce the risk” of these assets.
The PWG report calls for federal regulation that restricts institutions from lending customers’ digital assets and adheres to liquidity and capital requirements.
need better solutions
Much like banks, central lender Celsius uses crypto deposits from over 1 million retail customers and invests them in crypto markets, including DeFi, without proper risk management or any security measures for its users.
Therefore, the market needs a truly decentralized solution that does not obscure how they handle funds. Astra Protocol It is a decentralized solution that provides a compliance layer for the Web3 economy.
In the DeFi space, undercollateralized loans are becoming more and more popular. Nonetheless, while they offer the benefit of no central control, they carry considerable risks in terms of illiquidity of assets and instant payments. Astra’s truly decentralized project funds traditional players, allows borrowing and lending on the Astra network, and eliminates the need for these undercollateralized loans.
By merging the power of Web3.0 and the traditional financial ecosystem, Astra Network aims to create the next iteration of decentralization and become the largest network in the industry.
Zurich, Switzerland-based Astra essentially allows the protocol to comply with society’s numerous regulations without giving up the benefits of decentralization or putting investors at risk.
Decentralized compliance layer
Amid global mainstream cryptocurrency adoption and upcoming regulatory challenges, Astra has designed its network to be the only fully KYC (Know Your Customer) compliant decentralized blockchain ecosystem that can be used globally, This protocol enforces all compliance practices.
A large number of DeFi protocols offer this regulatory compliance to assure users that their investments are fully protected while maintaining their anonymity.
The Astra Network further provides countries and their treasuries with their infrastructure to issue financial products such as regulated and sustainable CBDC bonds and financial instruments, while taking advantage of the incredible yields offered by digital assets.
To achieve this, Astra equips all DeFi smart contracts with a fully decentralized compliance layer, including KYC and AML capabilities, and leverages the expertise of trusted law firms to solve real-world compliance issues.
To provide the best KYC/AML services, Astra has developed a unique Decentralized Legal Network (DLN), an ecosystem of major global legal and audit firms.
In terms of consensus mechanisms, systems that allow distributed systems to work together and remain secure, Astra is using environmentally friendly Proof of Stake (PoS), which is ideal for building real-world solutions for billions of people. users through its improved scalability and increased transaction throughput.
Compliance isn’t the only feature Astra offers. The project offers several other services, including enhanced vetting, a dispute resolution platform, anti-money laundering, and reporting process feedback and improvement procedures.
Demand for these services is increasing rapidly as the crypto market continues to attract more and more people and capital invested in the industry. Not to mention all the challenges the industry faces, such as lack of certainty in smart contracts, recurring derivative contract disputes, high legal risks of connecting real-world assets to the blockchain, and mismanagement of on-chain claims disputes.
Astra certainly has the potential to gain market fit here through its customizable services that provide security when retrieving erroneous transactions, create secure escrow accounts to prevent accidental withdrawals, provide a decentralized legal layer for user protection, and provide insurance The protocol comes with built-in claims verification tools.
Overall, Astra provides KYC, KYB and AML services for decentralized organizations, aiming to ensure that all DeFi and crypto platforms keep up with the changing regulatory landscape.
Image by Gerd Altmann from Pixabay