Tornado Cash survives, Mastercard and Binance Bitcoin cards, Layer 2 grows, BlackRock Bitcoin trust, countless funding rounds, Netflix in the metaverse. Plus Wells Fargo's report on Digital Assets.
11 August 2022
Hello there and welcome to the Blockchain From First Principle newsletter where we curate some of the week's news, summarise reports, podcasts,articles and look at blockchain, crypto and Web3 from the first principles for those seeking to understand more and stay ahead of their game.
This week Filip Novakovic joined our team. Filip will focus on the intersection of Blockchain, ESG and the built environment. Welcome aboard!
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Table of Content
🗞️The 10 news you should be aware of
💸 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
💡Inside the Metaverse and NFT's latest news, trends and insights
🔦Company spotlight
📅Blockchain, Crypto and Web3 events calendar
👩💻The job fair
📎Miscellaneous resources
🗞️ The 10 news you should be aware of
1. Treasury sanctions on Tornado Cash extend far beyond the US
On Monday, the US Treasury’s Office of Foreign Asset Control (OFAC) designated Tornado Cash as well as an ecosystem of linked wallets, saying that bad actors including North Korea’s Lazarus group had used the platform to launder more than $7 billion. Even after sanctions from the Treasury, Tornado Cash seems to be surviving.
2. Binance and Mastercard launched Bitcoin reward cards in Argentina
The users can buy things and pay bills, and get excess to the USD-backed stablecoins without the need of a bank or official exchange. The balance of the users in the holdings can be converted into fiat currency in real-time at the point of sale with up to a cash reward of 8% on the transaction. Argentina is the first country to have the card
3. Voyager Digital approved to return $270M to clients
Bankrupt firms will distribute the custodial amount held at MCB to the creditors. Last month the company was declared bankrupt under chapter 11 bankruptcy. 3AC is the biggest creditor to the firm as per the records.
4. Indian chief economic enforcement agency freezes Binance-owned WazirX’s
$8.14M of assets were seized by the Enforcement Directorate of Mumbai Based India’s largest crypto exchange. ED reported that the company was engaged in a fraudulent instant-loan application in laundering their capital through digital assets on their exchange. The lack of KYC norms ensured that missing assets are unrecoverable.
5. CFTC targets PredictIt for breaking rules
Commodity Trading Future Commission withdrawals permissions to the shutdown of the most popular prediction market non-profitable online marketplace PredictIt by Victoria University of Wellington in New Zealand. The marketplace to bet on political elections accepted cryptos too is to shut down its operations.
6. Crypto.com to expand in South Korea via two new acquisitions
Singapore-based Crypto.com acquired South Korean PnLink Co. and OK-Bit Co., following Electronic financial Industry regulations norms and securing payments. Recently, crypto.com received regulatory approvals in two European countries: Italy and Cyprus and is looking forward to further expansion.
7. Australia and Nepal to launch their CBDC projects
The Reserve bank of Australia and DFCRC are launching a one-year pilot project for CBDC. Nepal in Asia also revealed its plan to establish research on CBDC following China's trials and India’s plan to launch CBDC at the end of this year.
8. SEC orders crypto startup to register IOC tokens or face $31M fine
Bloom Protocol incorporated in 2017 raised around 31 million from 7,400 investors with IOC. The SEC accused the company of issuing unregistered securities and commanded it to register within 270 days and inform investors. The token tumbled 80% during the crash and after the news, trading in fractions.
9. Total value locked in DeFi dropped 66%, but multiple matrices reflect growth
TVL dropped from $160B to $70B reflected by the asset locked in smart contracts. Data shows that the DeFi projects are quickly adaptive to changes and evolving rapidly. While Layer 2 is on a path of sustainable growth with a dramatic cut in transaction fees and an increase in venture funds in Layer 2 projects.
10. BlackRock bitcoin private trust
“BlackRock is committed to providing clients with access to their choice of investment opportunities and has launched a spot bitcoin private trust. The trust is available to U.S. institutional clients and seeks to track the performance of bitcoin, less expenses and liabilities of the trust. Despite the steep downturn in the digital asset market,1 we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities.”
💸 The development of a startup ecosystem and major PE/VC funding
1. Heirloom raises $8M from Ripple and Forte
Ripple and Forte co-led the investment. The funding from the raise will be used for building out the product and for hiring to grow what is currently a 12-person team.
2. Layer 1 blockchain Injective raises $40M round led by Jump Crypto
Injective, a layer 1 blockchain focused on decentralized finance uses cases, has raised $40 million in a round led by Jump Crypto. BH Digital, the digital asset division of billionaire hedge fund manager Alan Howard's Brevan Howard, also took part in the round, which closed in July.
3. Europa Partners receives seed investment from Galaxy Digital
Galaxy Digital’s investment will provide seed capital for the Firm’s Europa Opportunistic Offshore Fund, a newly launched fund that will offer investors exposure to cryptocurrency markets by actively managing investments across the digital asset ecosystem, including spot assets, derivatives, and DeFi protocols.
4. Blockchain payments platform Ansible Labs raises $7M in seed funding round
The round was led by early-stage crypto venture capital firm Archetype. The capital will go toward hiring, liquidity and operating expenses ahead of the launch of the project's first product, according to a fundraising deck provided to CoinDesk.
5. CreatorDAO raised $20M in seed funding
CreatorDAO has raised $20M in a seed funding round led by a16z crypto and Initialized Capital. The financing round includes Liquid 2 Ventures, M13, Audacious Ventures, 6th Man Ventures, Abstract Ventures, SV Angel, Hack VC, Fika Ventures, Fuel Capital, Goldhouse, Soma Capital, Alliance DAO, Shima Capital, Olive Capital, Kygo's Palm Tree Crew, MGU Capital, Position Ventures, Alchemy Ventures, and more than a dozen world-leading angels and creators, including Paris Hilton, The Chainsmokers, Michael Ovtiz, and Liam Payne.
6. Cashmere raises $3M at a $30M valuation to build Solana Enterprise Wallet
Investors in the round included crypto venture-capital firms Coinbase Ventures and FBG Capital, as well as startup incubator YCombinator. Other participants in the new funding round include Volt Capital, Project Serum, Global Founders Capital, CreditEase and Soma Capital.
7. Geeq receives $25M capital commitment from investment group GEM
The capital commitment from GEM is designed to release the funds as performance milestones are met. It is reminiscent of the $200 million allocated to centralized-decentralized (CeDeFi) exchange Unizen, which was also a milestone-based and performance-related model.
8. Bain Capital leads $12M round for scalable blockchain developer RISC Zero
RISC Zero, a startup using zero-knowledge (zk) technology to create a scalable blockchain, has raised $12 million in a seed round led by Bain Capital Crypto other participants in the round included Geometry, D1 Ventures and Cota Capital. RISC Zero previously raised $2 million in a pre-seed round led by Geometry and Ramez Naam Ventures.
9. NFT distribution platform Pinata raised $18M in a Series A funding round
The funding round was co-led by the venture capital firm Greylock Partners and crypto-native investor Pantera
10. Analytics platform Merkle Science raises $19M to take on Bridge Exploits
Merkle Science, a predictive blockchain analytics platform, has added $19 million to its Series A funding round. The funding extension was co-led by tech-focused venture capital firm Beco Capital, Darrow Holdings (a Susquehanna affiliate) and K3 Ventures. The capital will help Merkle expand in the U.S. and fund research and development for forensics and analytics tools for emerging technologies such as decentralized finance (DeFi).
11. Lattice Capital raises $60M for Second Crypto Fund
The early-stage focused fund is three times larger than the inaugural fund last year. Lattice will write $500,000 to $1.5 million checks out of the fund with plans to invest in 40 to 50 companies.
12. Gunzilla Games raises $46M
Gunzilla Games announced that it has raised a total of $46 million in its latest funding round, led by Republic Capital. Other major participants include Griffin Gaming Partners, Morningstar Ventures, etc. Notable angel investors and advisor include Justin Kan, co-founder of Twitch. The new funds will allow the studio to build out its new platform called GunZ, which grants players complete ownership over their in-game possessions.
13. NFT minting platform Fair.xyz raises $4.5M seed round
Fair.xyz, has raised $4.5 million in seed funding, led by venture capital firm Eden Block. According to The Block, OpenSea, NFX and First Minute Capital also invested in the round.
14. Halliday secures $6M seed round led by a16z for ‘Buy Now Pay Later’ NFTs
Halliday has closed a $6 million seed round led by Andreessen Horowitz to accelerate the development of its ‘Buy Now Pay Later NFTs product.
15. Web3 infrastructure startup Kurtosis raises $20M in series A funding
Kurtosis has announced the successful completion of a $20 million Series A funding led by Coatue, and with participation from Coinbase Ventures and more. The fund will be used to accelerate the development of a blockchain infrastructure protocol to help developers easily build distributed systems.
16. Web3 specialist Fortress scores $22M+
Fortress Blockchain Technologies has raised $22.5 million in a seed round led by Ayon Capital. The fortress is developing financial, regulatory and technology infrastructure for the Web3 industry.
17. Portal Ventures closes $35M debut crypto vehicle
Portal Ventures has raised $35 million for its debut vehicle. The fund will make pre-seed investments in crypto startups. The fund is led by former Insight investor Evan Fisher, who says he is looking to find untapped value in the crypto space by focusing on infrastructure and enabling software needs in the space — the so-called “picks and shovels” segment of crypto startups.
📚 Reports and breakdowns of noteworthy developments, here is the TLDR
Digital assets — A world of possibility by Wells Fargo Investment Institute
Key takeaways
Many expect digital assets to be the building blocks of a new internet, the Internet of Value.
The Internet of Value will move forms of value around the globe, such as money, financial assets, and other personal valuables.
The Internet of Value is likely to be disruptive to the world of finance, just as the original internet was to communications and information
As the Internet of Value evolves, so will new possibilities and investment opportunities
The authors of the paper expect the adoption of digital assets to continue to accelerate over the coming years and add
“Early movers may get to ride the open network effects and gain economies of scale, while those late to the movement may lose.”
However, while they believe there is an investment thesis behind digital assets, they also reckon that the industry is still young and maturing.
“At such an early stage of investment development, many investment risks remain. The main risks facing the industry are additional regulations, technology and business failures, operational risks with handling and storing digital assets, price volatility and limited consumer protections.”
📈 Charts of the week
Most active investors in Blockchain companies by the top 100 public companies
The Chart below shows that since September 2021 to June 2022, forty corporations invested in companies in the blockchain/crypto space during this time. Samsung is the most active, having invested in 13 companies. UOB came in next with 7 investments, followed by Citigroup with 6 investments, and Goldman Sachs with 5.
Sequoia Capital has participated in 25 blockchain/crypto deals to date, while Sequoia China and Sequoia India have backed 13 and 22 deals, respectively. Since 2017, this trio has most actively invested in blockchain development and infrastructure. Notable companies that have received investment include Starkware, a developer of Layer-2 scaling solutions, and LayerZero Labs, which develops an omnichannel interoperability protocol
Visual metrics from the Messari and Dove Metrics “H1 2022 Fundraising Report.”
Crypto startups raised $30.3B in H1 2022, exceeding total raised in 2021. This comes in spite of the turbulent performance of crypto markets in the first two quarters of 2022.
CeFi led the game with $10.2B in inflows across, alluding to investor appeal toward more certain and less market affected sources of innovation.
Within CeFi, exchanges and payments are the leading verticals, deriving from strong and persistent market demand and scope for easy product deployment
💡Inside the Metaverse and NFT's latest news, trends and insights
1. Martin Shkreli is back with a Web3 drug discovery platform
Ex-pharmaceutical executive has announced the creation of a blockchain-based Web3 drug discovery platform that traffics in his own cryptocurrency, MSI, aka Martin Shkreli Inu.
2. Netflix enters the Decentraland metaverse promoted by Ryan Gosling
Netflix has joined the Decentraland metaverse by launching a replica of a maze found in its recent film, “The Gray Man” starring Ryan Gosling. The aim is to complete the maze as quickly as possible using one’s knowledge of the film to win digital wearables featured in the movie.
Other household names have also begun to establish their metaverse presence. JPMorgan and Fidelity bought the virtual property in Decentraland while HSBC chose The Sandbox. Fashion brands like Forever 21 and Dolce & Gabbana were part of Decentraland’s Metaverse Fashion Week 2022. A Pride parade also took place in Decentraland, with Mastercard as its key sponsor.
3. Superplastic drops the final part of SUPER GUCCI NFT
Animated celebrity creator and vinyl toymaker, Superplastic, is dropping the final instalment of the SUPER GUCCI NFT collection created in collaboration with Gucci.
4. Coca-Cola to launch generative and shareable NFT collectible drop
Coca-Cola partners with Polygon to launch generative and shareable NFT collectible drop for its loyal fans. The new collectible will feature a design inspired by the bubbles inside a Coke bottle. The generative and sharable NFTs of bottle designs will only be revealed once shared with a friend.
5. Music NFT platform HitPiece is prioritising ownership rights
HitPiece NFT platform is officially live, resolving its copyright concerns after being hit hard during the beta launch. The company partnered with Audible magic for an ownership rights solution. Audible magic verifies the identity and approves authorised minting of NFTs and safeguards the copyrights of artists.
6. Magic Eden submits proposal to build ApeCoinDAO an NFT marketplace
Magic Eden has proposed a marketplace for APE holders to buy and sell NFTs for a 0.75% transaction fee. The project is costless and the proposal works on ApecoinDAO’s governance system controlled by Bored Ape Yacht Club creating Yuga Labs. The proposal comes a week after Magic Eden announced it would launch on Ethereum.
7. Nvidia ups its metaverse bet with new developer tools
Nvidia Omniverse to launch new tools which will help enhance the building of accurate digital twins and realistic avatars. Focus on digital Identity and enhancing the quality of the metaverse interactions are key updates. Users can now direct the motions of avatars with time.
🔦Company spotlight
The company: 👉 Nuri 👈 integrates traditional consumer bank accounts with the world of crypto investing. It is one of Germany’s largest retail players based in CeFi, with 500,000 active users amounting to €325M in user deposits at its peak. Nuri offered services ranging from crypto savings and investment plants to traditional checking accounts and visa debit card issuing. It was backed by Solaris AG, a fully regulated bank, guaranteeing up to €100,000 fund protection under the German Deposit Guarantee Scheme.
The story: Nuri raised a total of $43.1M in funding over 8 rounds, a significant amount given the conservative nature of the Germany VC ecosystem. Yet, the exchange has struggled to find investors after its last Series B in June 2021, leading to staff layoffs and product rollbacks from Q2 2022.
Why in the spotlight: Nuri filed for insolvency on Tuesday, August 9th, quoting macro-economic conditions and the uncontained collapse of Celsius, the cryptocurrency lender, alongside a cooldown in funding inflows. Nuri states that investor Euro deposits, cryptocurrency funds (Bitcoin and Ether) and Nuri Pot investments are not affected, due to the partnership with Solaris AG.
Why should I care: Nuri’s downfall marks another week of turbulent market conditions creating a wave of insolvencies in crypto. CeFi startups filled all the boxes for a VC’s checklist from a product perspective, yet Nuri’s supporting foundation was based on platforms highly suspectable to market volatilities. Similarly, large players are consolidating their operations, buying up small players unable to raise funding from increasingly cautions VCs, as was the case for FTX, BlockFi, Bitvo and Bithumb. Further consolidation is expected throughout H2 across the crypto space.
📅 Blockchain, Crypto and Web3 events calendar
….for the next couple of months
Superverse | Aug 20-21, 2022 | Mexico City, Mexico
Coinfest Asia | Aug 25-26, 2022 | Bali, Indonesia
Surfin' Bitcoin | Aug 25-27, 2022 | Biarritz, France
The Science of Blockchain | Aug 29-31, 2022 | Stanford, California
BlackSeaChain | Sep 1-2, 2022 | Varna, Bulgaria
MetaWeek | Sep 11-14, 2022 | Dubai, United Arab Emirates
Hyperledger Global Forum | Sep 12-14, 2022 | Dublin, Ireland
Blockworks Digital Asset Summit | Sep 13-14, 2022 | New York, New York
The Family Office & High Net Worth | Sep 15, 2022 | New York, New York
NFT Show Europe | Sep 17-18, 2022 | Valencia, Spain
Australian Crypto Convention | Sep 17-18, 2022 | Gold Coast, Australia
Blockchain Expo Europe | Sep 20-21, 2022 | Amsterdam, Netherlands
Mainnet 2022 | Sep 21-23, 2022 | New York, New York
Web 3.0 for Developers 2022 | Sep 22, 2022 | Tel Aviv, Israel
Crypto Gibraltar | Sep 22-24, 2022 | Gibraltar, Gibraltar
Asia Crypto Week | Sep 26-Oct 2, 2022 | Singapore, Singapore
🆕 Cosmoverse | Sep 26-28, 2022 | Medellin, Colombia
🆕 Converge22 | Sep 27-20, 2022 | San Francisco, US
TOKEN2049 | Sep 28-29, 2022 | Singapore, Singapore
SmartCon 2022 | Sep 28-29, 2022 | New York, New York
Blockchain & Infrastructure | Sep 29-30, 2022 | Washington, US
World Blockchain Expo | Sep 29-30, 2022 | Dubai, United Arab Emirates
Crypto Fest 2022 | Sep 30, 2022 | Cape Town, South Africa
Blockchain Economy Dubai Summit | Oct 4-5, 2022 | Dubai, UAE
Crypto Expo Dubai | Oct 5-6, 2022 | Dubai, UAE
DeFi Conf 2022 | Oct 6, 2022 | Belfast, United Kingdom
🆕 Future Blockchain Summit | Oct 10-13, 2022 | Dubai, UAE
🆕 Stellar Meridian 2022 | Oct 11-13, 2022 | Rome, Italy
🆕 CBDC Summit 2022 | Oct 12-13, 2022 | Washington, US
🆕 Bitcoin Amsterdam 2022 | Oct 12-14, 2022 | Amsterdam, Netherlands
👩💻The job fair
1. VP of Business Development & Strategic Partnerships at NFT.com (Remote)
2. Investment Manager & Team Lead at Outlier Ventures (London)
3. Web3 Co-founder CTO at Vestable.xyz (Remote and Austin, TX)
4. Web3 Director of Financial Intelligence Unit at Moonpay (Remote)
5. Web3 Blockchain Protocol Engineer at Polygon (Remote)
📎 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 the third-party websites linked above.