How Cake DeFi beat the crypto winter

In Token Issue this week, we analyze Cake DeFi’s path to potentially hitting unicorn status as the market wipes out billions in crypto value. [Read from your browser]( Token Issue Welcome to Token Issue! Delivered every Friday, this free newsletter breaks down the biggest stories in Asia’s crypto scene and beyond. View past issues [here]( or [sign up here]( to receive future newsletters. Written by Deepti Sri Crypto journalist Hi {NAME} I’ve spent 21 months writing over a thousand fun stories for Tech in Asia. And I’m one newsletter away from being officially called “the girl who writes zero-to-hero” stories. I’m constantly throwing the spotlight on startups that have outdone themselves, and I’m going to do it again. This time, I’m here to tell you a bit about Cake DeFi, a crypto startup that has taken the conservative path to potentially enter unicorn territory. It's not just any crypto startup that promises high yields - it has posted over US$65 million in quarterly revenue within just two years. What’s even more interesting is that this venture is coming from Julian Hosp, a founder who quit his previous startup amid bitter controversy. Unlike other crypto firms that have gone under, Cake DeFi is relatively free from such drama. The company also turned cash flow positive in June despite a bear market that has led major crypto lender Celsius to freeze withdrawals and Bitcoin prices to tumble by 26%. As part of this week’s story spread, we analyze how Cake DeFi bucked the crypto trend without raising any VC money. – Deepti  ---------------------------------------------------------------  THE BIG STORY [How this rarest of crypto startups is shrugging off winter]( While on the surface, Cake DeFi looks similar to the likes of Celsius or BlockFi, it stands out as a crypto platform that’s “completely transparent” about how its yields are generated, whether it’s through staking, lending, or liquidity farming, its founder says. The company is currently weathering the brutal crypto winter through a bunch of interesting strategies. --------------------------------------------------------------- ⭐ TO THE STARS A look at what’s pushing Web3 forward. The Merge is coming I know, “The Merge is coming” is starting to sound like a pop song on repeat. But Ethereum recently merged its last testnet, Goerli, bringing it one step closer to adopting its new model. The Merge, predicted to happen on September 15, is definitely one of the biggest events in crypto history, as Ethereum is set to go through a major software update that will push it from the proof-of-work to proof-of-stake model. This transition is expected to cut down on the blockchain’s energy use, paving the way for future upgrades that will allow Ethereum to process more transactions. While the crypto community has been excited - enough to put up [memes on the merge]( for sale on Opensea - Ethereum has set out to [bust a few “misconceptions.”]( For instance, it looks like The Merge will not result in lower gas fees, according to the blockchain’s latest update on August 17. Transactions after The Merge might not be “noticeably” faster either. Theoretically on proof-of-stake, blocks will be produced about 10% more frequently than on proof-of-work. That’s not a huge difference. On the positive side, however, the Ethereum team has guaranteed zero downtime in the transition. Ethereum has also maintained that it will reduce energy consumption by nearly 99.95% following The Merge. Also, the amount of ETH issued yearly will fall from 4.3% to roughly 0.4% after the move, which is good news for token holders. However, several ETH miners have resisted the merge to create a new, parallel network and cryptocurrency. Since the proof-of-stake model will end the practice of mining, it will also strip them of a vital source of income. Another concern is how Circle, the centralized issuer of major stablecoin USDC, may have an [outsized role]( in deciding which version of Ethereum succeeds, going against crypto’s decentralized ethos. We’ll be sure to keep a close eye on Ethereum over the next month  --------------------------------------------------------------- 🌙 TO THE MOON Tokens, NFTs, and yield generators we’re noticing. 1️⃣ [Pudgy Penguins]( This is a community NFT that has created buzz because of its reputation as a way to make a quick buck and for its country club-esque exclusivity. It has just [introduced]( its lineup of physical toys licensed directly by NFT holders, skyrocketing its sales volume by 350%. 2️⃣ [Ankr]( Ankr is a Web3 infrastructure platform that is looking to make the process of deploying staking nodes in decentralized apps easier for developers. Its native token, Ankr, can be used in making payments, gaining access to applications, staking, and participating in governance. --------------------------------------------------------------- 🌏 BACK TO EARTH The week’s biggest roadblocks. 1️⃣ The Tornado fallout: On August 8, the US Treasury Department [banned]( residents of the country from using decentralized crypto-mixing service Tornado Cash. Mixers like Tornado help enable anonymous transactions to protect user privacy. Some believe the move is an honest attempt to rule out illicit actors who have laundered funds during major heists and question how much of Tornado Cash’s transactions are actually innocuous. Others criticize the move for hurting the privacy of innocent users and setting a bad precedent by persecuting a mere developer of a software tool. That said, most programmers aren’t building solutions that allow easy transfers that bypass the banking system (illicit or otherwise), so for the firm to expect no repercussions might be naive. In any case, Tornado Cash is still up and running, and there’s nothing stopping copies from spinning up. One has to ask if the sanctions are even effective. 2️⃣ Yet another depegging event: Over the past weekend, Polkadot-based DeFi platform Acala’s native stablecoin, aUSD, depegged from the US dollar after a hack. However, the stablecoin is climbing back to its dollar peg after the community voted to [burn 1.3 billion aUSD](. 3️⃣ Coinbase may not have its bases covered: Coinbase is currently being investigated by the US markets regulator as the crypto exchange has [come under fire]( for its token listing processes as well as its staking programs and yield-generating products. Nevertheless, Coinbase doesn’t expect the investigations to have a “material adverse effect" on its financial health.  --------------------------------------------------------------- STILL A PONZI SCHEME The latest Web3 and crypto takedowns. "Ponzi schemes cannot be restructured. And don’t think for a second that Bitcoin miners are philosophers stones. The one and only solution for Celsius is to shut it down immediately and give the remaining coins back to the customers. Then send the CEO to jail. The end.” – [The Financer, anonymous crypto critic]( Crypto lender Celsius has received offers to help fund its restructuring process after filing for bankruptcy in the US. However, an anonymous Twitter critic has raised concerns about the restructuring effort, as customer deposits will end up being paid back last - if at all. While the critic comes across as pro-Bitcoin, it looks like they have lost a significant amount of money from the Celsius crisis. The critic has built a tool to calculate when they can expect to rebuild their lost portfolio, with a target date of June 28, 2039. “@Mashinsky stole 17 years of my life,” the critic tweeted, referring to Celsius founder Alex Mashinsky. The anger is well-justified. Mashinsky reportedly overruled executives with decades of experience in finance to sell off hundreds of millions of dollars’ worth of bitcoin, resulting in US$50 million of trading losses in January. The company has also come under fire for misleading people about its debt, which [stands at over US$2.8 billion]( against its bankruptcy filing claims of a US$1.2 billion deficit. There’s never a dull day at Celsius.  --------------------------------------------------------------- MORE TO CHEW ON Essential news and views. 1️⃣ [Big tech meets blockchain]( Among 100 publicly listed companies that have invested in blockchain technology, Google parent firm Alphabet leads the pack after having poured US$1.5 billion across just four rounds, according to a report by Blockdata. Meanwhile, Samsung was the most active, with the company investing nearly US$1 billion across 13 rounds. 2️⃣ [Hodlnaut files for protection from creditors]( This week, crypto exchange Hodlnaut said it has filed an application with the local high court to be placed under judicial management as part of its attempt at overcoming setbacks without going out of business. The company is also temporarily protected from legal proceedings by third parties. 3️⃣ [Deal off the table]( The crypto world’s first US$1 billion deal has been abandoned. Galaxy Digital, a crypto-based investment manager, announced that it has terminated its US$1.2 billion acquisition offer for crypto custody firm BitGo, as the latter failed to deliver audited financial statements for 2021 by a July 31 deadline. However, BitGo is seeking US$100 million in damages from Galaxy for calling off the deal.  --------------------------------------------------------------- That’s all for this issue - we hope you liked it. WAGMI! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894