Voyager debacle, new crypto custodians and stablecoins, litigations and bailouts. Plus 3 summer reading lists.
8 July 2022
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Table of Content
🗞️The 14 leading news you should be aware of
🔦Company spotlight: Voyager Digital
💸 The development of a startup ecosystem and major PE/VC funding
📚Reports and breakdowns of noteworthy developments, here is the TLDR
📈Charts of the week
💡Summer reading list
📅Blockchain, Crypto and Web3 events calendar…
📎Miscellaneous resources
🗞️ The 14 news you should be aware of
1. KeyFi CEO sues Celsius Network
Jason Stone - one of the individuals behind yield farming account 0xb1 and CEO of KeyFi, Inc. - is suing Celsius for allegedly refusing to honor its contract. In a lengthy Twitter thread, Stone said the DeFi account 0xb1 was managing nearly $2 billion in assets for Celsius at one point and that Celsius “assured” him that it was taking adequate risk management measures, such as “hedging any potential impermanent loss from our activities in liquidity pools.”
2. MakerDAO voted to create a DAI loan vault for Huntingdon Valley Bank
MakerDAO voted to create a DAI loan vault for Huntingdon Valley Bank, a regulated bank founded in 1871 in the United States. The DAI loan vault will initially have a debt ceiling of $100 million, which will subsequently be expanded to $1 billion. This enables the bank to borrow DAI tokens after posting off-chain loans as security on its balance sheet. This will connect DAI to traditional finance. MakerDAO anticipates a 3% yield.
3. US Regulators release first of many reports on crypto following Exec Order
The report was co-authored by the Secretary of the Treasury, the Secretary of State, the Secretary of Commerce, the Administrator of the United States Agency for International Development (USAID), and "the heads of other relevant agencies." The framework, which contains the term "risk" 16 times, is "meant to ensure that […] essential America's democratic ideals are protected." Highlights include more instructions on stablecoins, which Treasury Secretary Janet Yellen has counselled caution on, particularly for retail investors following the fall of Terra stablecoin UST, and an emphasis on the need to "watch out for instability and crime from digital assets."
4. How Solana, Polygon and HTC’s new crypto phones compare
Both Solana and Polygon have announced mobile Web3 initiatives, while HTC has introduced a new "metaverse phone." It is the most recent wave of Web3 smartphone projects, following a previous wave a few years ago. This article discusses how "Solana Saga + SMS," "Polygon + Nothing," and "HTC Desire 22 Pro" are similar and distinct.
5. UK asset manager trade body calls for tokenization of blockchain funds, DeFi taskforce
The UK's Investment Association (IA) has urged the British government and regulator, the Financial Conduct Authority (FCA), to provide a framework for tokenized funds to operate in the country. It also urges the formation of a task force on decentralised finance (DeFi) to investigate the sector's policy implications. Members of the trade association control £9.4 trillion in assets. It released a research that looked into the potential use of blockchain and DeFi in asset management.
6. SIX Digital Exchange’s Web3 unit partners Fireblocks for crypto custody
SDX Web3 Services and Fireblocks have established a strategic agreement for cryptocurrency custody for financial institutions and institutional investors. SIX Digital Exchange (SDX) began with a tokenized securities offering before launching its crypto-focused Web3 division two weeks ago. It intends to enable cryptocurrency custody and staking. The Fireblocks service will initially serve key cryptocurrencies before expanding to other tokens, with a debut in the second part of this year expected. The solution offers transaction execution and compliance in addition to key storage.
7. DeFi protocol Aave proposes the creation of a stablecoin called GHO
Aave Companies, the entity behind the DeFi protocol Aave, has proposed to Aave's governance forum the creation of a new stablecoin named GHO. The concept is currently being discussed, and it would require a governance vote to be adopted. The stablecoin would be overcollateralized, similar to dai, the Ethereum ecosystem's most popular decentralised stablecoin. "While GHO would be secured by the assets on the Ethereum market, the main vision for GHO is to pursue organic adoption via L2s [layer 2s] to solve real-life payment opportunities across the internet and on-ground," said Aave founder.
8. Crypto exchange FTX has ‘a few billion’ to support the industry, Bankman-Fried says
FTX CEO Sam Bankman-Fried claims his company and he still has a few billion to support suffering firms during the crypto collapse. The bailouts are intended to protect client assets and prevent the market from becoming infected. Bankman-Fried has already used his personal money to bail out failing cryptocurrency businesses. His net worth was roughly $24 billion earlier this year, but the crypto meltdown has cut that sum in half.
9. Ethereum's Sepolia testnet successfully switches to Proof-of-Stake
Ethereum's Sepolia testnet has successfully switched from proof-of-work to proof-of-stake. There is only one more testnet to merge before the Ethereum blockchain attempts the Merge. The Sepolia testnet went to proof-of-stake around 17:00 UTC. No significant glitches have been reported.
10. Crypto lender Nexo offers to buy embattled rival Vauld as the market consolidates
Nexo is considering an all-equity purchase of Vauld. It will get 60 days of exclusivity to investigate Vauld's books and conduct due diligence. Nexo intends to rebuild Vauld and expand into Southeast Asia and India. Celsius had previously declined the loan firm's bid to purchase it.
11. Indian crypto taxes crush trade volumes as local exchanges eye exodus
On July 1, the Indian government imposed a 1% tax on any cryptocurrency transactions worth more than 10,000 INR. Since the tax's adoption, trading volume on Indian exchanges has dropped by at least 50%. In addition, any cryptocurrency-related revenue in India is taxed at 30%. Several companies have begun to relocate to crypto-friendly countries such as Dubai and Singapore.
12. Ethereum difficulty bomb delayed to Mid-September
Ethereum's developers have delayed the difficulty bomb by another 100 days. The delay is an acknowledgement that the Merge will take longer to complete. Rushing development for the Merge would be irresponsible. The developers are reluctant to announce a hard deadline for the Merge as the pressure could result in the team burning out or making bad decisions.
13. FTX signs deal that could buy BlockFi for up to $240 million
BlockFi has agreed to an option to be acquired by FTX for up to $240 million. The acquisition figure will include performance incentives. BlockFi lost around $80 million from its loan to Three Arrows Capital. It also saw an uptick in withdrawals due to Celsius blocking withdrawals on its platform, despite having no exposure to them.
14. Reddit is launching a new NFT avatar marketplace
Reddit is launching an NFT-based avatar marketplace that allows users to purchase blockchain-based profile pictures for fixed rates. Users will be able to purchase the NFTs using their credit or debit cards and they can store the NFTs in a Reddit wallet. NFT holders will have licensing rights to use the NFTs on and off Reddit as an avatar. The NFT avatars will be available to members of an invite-only subreddit today. A wider release is planned for the coming weeks.
🔦Company spotlight
The company: 👉 Voyager Digital 👈 is a publicly traded cryptocurrency platform that offers a secure way to trade over 100 different crypto assets and earn rewards on more than 40 cryptocurrencies.
The story: the Jersey City based firm was founded in 2017 and raised a total of $360M in funding over 6 rounds. Their latest funding was raised on Jun 17, 2022. In 2021 it reported $415M in revenue. Alameda Research, the trading firm co-founded by Sam Bankman-Fried, the billionaire crypto impresario and Digital Currency Group are the most recent investors.
Why in the spotlight: The Crypto broker suspended all withdrawals, debit cards, trading, deposits, and loyalty rewards on July 1st and filed for bankruptcy protection on July 6 just weeks after getting a lifeline from Sam Bankman-Fried. The company blamed market volatility and the default of Three Arrows Capital (3AC) to which it lent money.
💸 The development of a startup ecosystem and major PE/VC funding
1. Nomura, SBI collaborate to invest in web3 tokens as venture capital
Japanese firms Nomura and SBI plan to work together to invest venture capital funds in crypto tokens for startups. “If we don’t have the means to invest in tokens, we will not be able to invest in Web3 companies that mainly raise funds with tokens,” said Takeshi Goto, an EVP at SBI Investment.
2. Web3 network WeatherXM raises $5M in seed funding
Weather XM, a weather network that utilizes crypto incentives to improve the accuracy of forecasts, has raised a $5 million seed round led by Placeholder VC. Other investors in the round included Metaplanet, ConsenSys Mesh, Protocol Labs and Border Capital among others.
3. Kyve Network hits $100M valuation as it raises $9M
Kyve Network, a decentralized data storage solution, has raised $9 million in a round led by Distributed Global, according to a news release. Kyve was valued at $100 million after the raise. Wicklow Capita, IOSG Ventures, Blockchain Coinvestors, Anagram, Cerulean Ventures, Huobi Incubator and MEXC Global also took part in the round.
4. Crypto Exchange Unizen receives $200M from Investment Group GEM
Centralized-decentralized (CeDeFi) exchange Unizen has received $200 million "capital commitment" which is milestone-based and performance-related to accelerate development of its trade aggregation system. The funds will be used to improve Unizen's systems, grow its team, market its products and accelerate its in-house aggregation system, which is designed to find the most efficient trade routes across different crypto exchanges, such as Binance, Uniswap and PancakeSwap.
5. FTX Token DAO Raises $7M From Community of Sam Bankman-Fried Fans
A community dedicated to FTT, the native token of cryptocurrency exchange FTX, has raised $7 million (250,000 FTT), which will be converted into an ecosystem fund that will contribute to community-led projects across DeFi and crypto education.
📚 Reports and breakdowns of noteworthy developments, here is the TLDR
In this webinar, PitchBook's Head of Emerging Technology Research, Paul Condra, examined emerging technologies poised to drive growth opportunities in the years to come. The discussion explored the sustained growth of Web3 & DeFi, startups building meta-verse products and the continuation of above-average emerging tech deal sizes.
Key takeaways:
Q1 deal value strong, but down from Q4: Emerging Technology Indicator (ETI) investment reached $8 billion across 227 deals in Q1 2022, the second-highest amount on record as the market retreated from Q4’s all-time peak of $10.3 billion across 240 deals.
Continued strength in large deals: In Q1, we recorded 22 ETI deals sized $100 million or larger, well above the historical quarterly average of five (back to 2015), but down from the all-time peak of 25 in Q4.
Crypto tops deal value again: For the third consecutive quarter, Web3 & DeFi was the largest area of ETI investment, with $2 billion invested across 29 deals, down from $2.4 billion across 30 deals in Q4.
Metaverse theme expands: Several startups are building products and services aimed at the emerging “metaverse” opportunity. These included a broad range of gaming and crypto ventures.
According to the analytics service DeepDAO, in 2021 the total value of DAO treasuries surged fortyfold, from $400 million to $16 billion, and the number of DAO participants increased by 130 times from 13,000 to 1.6 million.
This report published by the World Economic Forum provides an overview of the DAO landscape, explores DAOs’ advantages and disadvantages compared to traditional organizational structures and offers a breakdown of some of the key risks they face.
The landscape - Generally, the DAO landscape can be segmented according to objective and means. This report offers a novel taxonomy, breaking down the DAO ecosystem into nine categories: Functional; Governance; Task; Investment; Philanthropic; Special purpose acquisition DAO (SPAD); Production; Community; Flashmob
Strengths and weaknesses - DAOs may offer a way to achieve greater transparency, trust, adaptability and the potential to direct activity towards a multiplicity of goals. Conversely, DAOs today confront issues of governance, voter engagement, power concentration, cybersecurity and regulatory fragmentation and uncertainty.
Key risks - Several practical, legal and regulatory risks affect DAOs such as the blockchains they run on; information asymmetries between creators and contributors; lack of voter engagement and voter fatigue; legal status, applicable laws and regulations, and jurisdictional uncertainty.
📈 Charts of the week
The chart below depicts the percentage of BTC wallets that are losing money, including both short-term (Red) and long-term holders (Blue). 48.1 percent of short-term investors and 28.6 percent of long-term investors are currently losing money. Both metrics are approaching highs reached in early 2019 and during the 2020 COVID crash, which both constituted relative bottoms in price movement.
While this does not necessarily signal that the worst is past, it does provide a baseline for how nasty things have been.
“Some crypto participants have frozen asset withdrawals, most notably Celsius and Voyager, highlighting the pain which is beginning to be felt. We feel that this pain will spill over to the crowded exchange industry, with nearly 300 actively trading, 100 of those trade over US$50M per day according to Coinmarketcap data. Given it is such a crowded market, and that exchanges rely to some extent on economies of scale the current environment is likely to highlight further casualties.
Very few exchanges have seen volume growth recently, of the top 12 only FTX, Kraken and Binance have rising Bitcoin spot volumes according to Kaiko data.
Volumes in the spot Bitcoin market were averaging a daily US$10bn in 2021 but have since declined to an average of US$2.5bn in 2022. While the whole industry is seeing tougher trading conditions, those exchanges which have a low market share and are seeing steep declines in volumes look particularly vulnerable.”
💡Summer reading list
Whether you’re looking for vacation readings for education or for entertainment, from algorithms, cryptography, and NFTs to mythic Ancient Greek heroes, novels and business books, there’s something on these lists for everyone!
📅 Blockchain, Crypto and Web3 events calendar…
…for the next couple of months
Paris Blockchain Summit | Jul 8, 2022 | Paris, France
🆕 DeFi Philly Conference 2022 | Jul 8, 2022 | Philadelphia, Pennsylvania
Blockchain and Internet of Things | Jul 8-10, 2022 | Tokyo, Japan
International Congress on Blockchain | Jul 13-15, 2022 | L’Aquila, Italy & Online
Blockchain & Liberty for All | Jul 14, 2022 | Online
World Blockchain Summit Singapore | Jul 14-15, 2022 | Singapore, Singapore
Mallorca Blockchain Days | Jul 14-17, 2022 | Mallorca, Spain
🆕 Avalanche House | Jul 15-16, 2022 | New York, New York
Metaverse Summit | Jul 16-17, 2022 | Paris, France
Ethereum Community Conference 5 | Jul 19-21, 2022 | Paris, France
🆕 Bloomberg Crypto Summit 2022 | Jul 19, 2022 | New York, New York
🆕 House of Muse | Jul 20-21, 2022 | Online
Crosstech Mexico | Jul 21-22, 2022 | Ciudad de México, Mexico
Blockchain Economy Conference | Jul 21-22, 2022 | Istanbul, Turkey
Mining Disrupt | Jul 26-28, 2022 | Miami, Florida
Blockchain Economy Istanbul Summit | Jul 27-28, 2022 | Istanbul, Turkey
NFT South | Jul 28-30, 2022 | Dallas, Texas
🆕 NFT Expoverse Los Angeles | Jul 29-31, 2022 | Los Angeles, California
Sustainable Energy: Blockchain and Cryptocurrency | Aug 1-3, 2022 | Online
🆕 Korea Blockchain Week | Aug 7-14, 2022 | Seoul, Korea
ETHToronto | Aug 8-10, 2022 | Toronto, Canada
Blockchain Futurist Conference 2022 | Aug 9-10, 2022 | Toronto, Canada
Fintech Fest 1.0 | Aug 10, 2022 | San Diego, California
Play-2-Earn Expo | Aug 10-13, 2022 | Bangkok, Thailand
Superverse | Aug 20-21, 2022 | Mexico City, Mexico
Coinfest Asia | Aug 25-26, 2022 | Bali, Indonesia
BlackSeaChain | Sep 1-2, 2022 | Varna, Bulgaria
🆕 Hyperledger Global Forum | Sep 12-14, 2022 | Dublin, Ireland
📎 Miscellaneous Resources
The opinions are our own. The content of this newsletter is not intended to serve as financial advice and is for general informational and educational purposes only. We do not warrant, endorse, or assume responsibility for the accuracy of any information offered by third-party websites linked above.