Evidence of concentrated DeFi liquidity from DEXs and AMMs
The OECD published a paper that provides evidence of increased concentration of decentralized finance (DeFi) liquidity provision in decentralized exchanges (DEXs) and automated market makers (AMMs). A low trade count is observed in liquidity pools where DeFi liquidity provision is concentrated, with 20% of the pools of some of the DEXs examined accounting for more than 90% of the trading volume of these DEXs. Also, a small number of liquidity providers participating in the examined pools represent a significant part of the trading activity. This could exacerbate DeFi vulnerabilities, with possible impact on market functioning, price discovery, and competitive dynamics. [Read more at the OECD]
Custodia to file appeal over denied access to Fed master account
Custodia Bank will appeal the US District Court ruling in Wyoming that supported the decision of the Federal Reserve Bank of Kansas City to deny Custodia a master account. This move is part of Custodia’s continued efforts to secure direct access to the Kansas City Fed’s payment systems, which it deems crucial for the growth of its operations. The appeal marks the latest development in a prolonged legal battle that goes back to 2022. The March 29, 2024 ruling highlighted the Fed’s discretionary power in granting or denying master accounts, the judge stating that “Federal laws do not require the Federal Reserve to give every eligible institution a master account.” [Read more at Bitcoinist]
FYI I’ll be speaking at the Digital Currency Conference in London on September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]
Kiffmeister’s central bank digital currency monthly monitor
Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.
