Mastercard and Binance in 90M stores, more Merge announcements, Paypal joins Coinbase's network, Shima Capital $200M and Ready Player Me $56M. Plus DeFi key trends and Crypto Custody Developments.
25 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.
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Table of Content
🗞️The 18 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 18 news you should be aware of
Tether has almost daily contact with key law enforcement officers and it has not received any requests to freeze privately held wallets associated with Tornado Cash. The company intends to fully comply with any request it receives. Freezing addresses without instruction from authorities could interfere with investigations.
2. Mastercard begins working with Binance
Mastercard is working with Binance to enable purchases in more than 90 million stores. The project will start in Argentina, a country where the national currency inflation is at 71%. VISA is launching a prepaid card with cashback in BTC in Brazil.
Ethereum's Proof-of-Stake upgrade is finally here. The Merge will be activated with the Bellatrix upgrade, which is scheduled for epoch 144896 on the Beacon Chain. Ethereum will transition to Proof-of-Stake between September 10 to 20 after a specific Total Difficulty value is reached.
4. Stablecoin Tether’s reserves fell by $16B in the second quarter
The reserves of the largest stablecoin tumbled from $82.4B to $66.4B in the second quarter. Companies’ treasury bills holding dropped too. Tether to reduce commercial paper holding and predominating towards Treasury Bills as per CTO.
5. World Bank IFC launched tokenized Carbon Credit fund
The Fund will tokenize high-quality carbon credits built on Chai Private Blockchain which is based on proof of Space and Time consensus. The fund also introduced two Non-profitable fintechs Aspiration and Cultivo.
6. VMware Blockchain unveils enterprise version of Ethereum
VMware platform is built on the SBFT consensus engine and EVM. Parallelly, Infosys announced a solution for Virtual records Management built on VMware blockchain. It addresses the gaps in scalability & performance, privacy, Governance and Supportability.
7. DTCC T+0 settlement platform live on DLT with 100,000 transactions per day
The goal of Project Ion is to provide a resilient, secure and scalable alternative settlement service to clients and support a netted T+0 settlement cycle, as well as T+2, T+1 and extended cycles. DTCC partnered with R3 leveraging R3’s Corda DLT software.
8. Paypal to join Coinbase’s TRUST network to increase regulatory compliance
Paypal became the 38th member to join the network. TRUST network rules require financial institutions to share client data exceeding a certain transaction limit while protecting data privacy. Crypto exchanges, such as Binance.US, Crypto.com and Kraken, are involved in TRUST.
9. Crypto prices dropped massively. Top 50 coins lost almost 15% this week
Digital assets lost 10% of capitalization last week. Bitcoin was hit by a long liquidation of $210 million on Friday. Bitcoin recently touched two months high of $24500, tanked below $21500 and ETH below $1700. Market in consolidation mode ahead of Ethereum Merger.
10. Telegram plot to introduce a new marketplace for usernames
Founder Pavel Durov proposed a marketplace to auction "usernames" via smart contract on the TON blockchain. After the news TON surged 10%. Let's see if we can add a little bit of Web 3.0 to Telegram in the coming weeks,” Durov said.
11. Blockchain for Energy signs up new consortium member Devon Energy
Devon Energy, a pioneer in oil exploration and production joined the B4E bringing the membership to nine. The workstream includes five projects, including Blockchain and IOT for commodity transport solutions. Previously Data Gumbo and GuildOne joined the consortium.
12. BendDAO Hit by Insolvency Crisis as Ethereum Reserves Drained
The NFT borrowing and lending platform’s reserves fell to 0.75 ETH. BendDAO claims to offer 77.54% APRwith 73% paid in ETH and 4.53% paid in its BEND token. As a result disincentivize paying back and in hot water of liquidation.
13. FTX revenue surged 1000% to more than $1B
Despite the bearish market, FTX came forth with an operating income of $272M up $14M from last year, acquiring crypto struggling companies too, including fintech firm Liquid. Last week FDIC caught FTX for misleading statements on held assets in exchange for FDIC insured.
14. MakerDAO opened a $100M DAI loan to Huntingdon Valley Bank
HSV became part of the vault with the majority of votes in the governance process. The move diversified counterparty risk. HVB has the ability to acquire more capital over the next 12 months. MakerDAO is also looking forward to facilitating loans to Traditional Finance.
15. Coinbase CEO Says Exchange Is Cutting Costs, Focusing on Subscriptions
Company to focus on a subscription model in upcoming days which accounts for 18% of revenue. The company was hit hard by the economic downturn with an approximately 60% revenue decline. Now they are anticipating the subscription revenue to exceed 50% to keep the firm on track.
16. Samsung working on the South Korean Crypto Exchange
Samsung and other members of the Korea Financial Investment Association are constructing a crypto exchange. The major financial firm Mirae Asset Securities is also involved. Those companies are pursuing individual goals around cryptocurrency in addition to the group effort. (View also Samsung NFT)
17. Crypto may get its own legal lane in the UK
The crypto ecosystem has an international gap in setting legal standards on digital assets. Britain’s Law Commission has proposed that crypto be considered a separate category in English property law, a move that could pave the way for setting an international standard.
18. Nigeria seeks to boost E-Naira users 10-fold as cryptos grow
The adoption of stable coins like USDT is on the rise in the West African nation. 840,000 are the users of Nigeria’s central bank digital currency (CBDC), the e-naira, launched in October.
💸 The development of a startup ecosystem and major PE/VC funding
1. Bitcoin Depot set to go public at an $885M valuation
The company will combine with the special acquisition company GSR II Meteora Acquisition Corp, officials at the company told the Wall Street Journal Thursday. Bitcoin Depot CEO Brandon Mintz told the Wall Street Journal that he is looking to target acquisitions after going public.
2. Digital Currency Group and Node Capital lead $5M fundraise for Blockchain security firm dWallet Labs
The pre-seed round will be used to build out the team and the interface. Other participants in the funding round included Amplify Partners, Lightshift Capital, Liquid2 Ventures, Collider Ventures, Lemnsicap, Heroic Ventures and Earl Grey Capital, among others.
3. Blockchain VC Shima Capital debuts with $200M Web3 fund
The Shima Capital Fund I raised a combined $200 million from several high-profile crypto investors, including Dragonfly Capital, Animoca Brands and OKX. The fund is set to deploy between $500,000 and $2 million in pre-seed funding for crypto- and blockchain-focused companies at the intersection of consumer products, decentralized infrastructure and futuristic blockchain technology.
4. NFT-backed loan protocol Unlockd raises $4.4M seed funding
The seed funding was led by Blockchain Capital. Investors that participated in the round included Sfermion, Spartan Group, Play Ventures, IDEO CoLab, Bitscale, and others. The funds will be used for product development, cross-chain expansion, marketing, and engaging a tier 1 auditor to ensure the security of the protocol.
5. a16z leads a successful $56M fundraising round for Ready Player Me
A $56 million funding round led by Andreessen Horowitz (a16z) has been completed for Ready Player Me, a cross-game metaverse avatar platform. With its cross-platform metaverse approach, which encourages interoperable avatars, the New York business has succeeded. More than 3,000 game and app developers use Ready Player Me's avatars.
6. Inworld AI raises $50M Series A
Inworld AI, a developer platform for creating AI-driven virtual characters, today announced the closing of a $50 million Series A funding round, co-led by Intel Capital and Section 32.
7. Invesco jumps on the $5T Metaverse race with a new thematic fund
Invesco has launched a metaverse fund that focuses on seven thematic segments of the industry. The UK-based investment management company joins a growing list of fund managers looking to take advantage of the rapid growth of the metaverse.
📚 Reports and breakdowns of noteworthy developments, here is the TLDR
The latest report from Elliptic sheds some light on what the issues in the industry are and where the most impact is to be had in terms of reducing fraud and improving the repatriation of NFT and crypto.
The figures:
NFTs worth $100M reported stolen over the past year
Thefts in May 2022 topped the list in terms of value with 3,473 NFTs worth $23.9 million stolen.
Thieves received an averaged $300,000 per scam,
The true scale of NFT thefts is likely to be even higher, given that not all crimes are publicly reported
Types of crimes:
Over $8 million of illicit funds has been laundered through NFT-based platforms since 2017 – representing 0.02% of trading activity originating from known sources.
However, a further $328.6 million (0.81%) originates from obfuscation services such as crypto mixers. A proportion of this may reflect proceeds from illicit activity.
Tornado Cash, a US-sanctioned mixer, was the source of $137.6 million of crypto assets processed by NFT marketplaces and the laundering tool of choice for 52% of NFT scam proceeds before being sanctioned by OFAC in August 2022. Its prolific use by threat actors engaging with NFTs further emphasizes the need for effective sanctions screening by NFT platforms.
Stolen NFTs:
Over $100 million worth of NFTs were publicly reported as stolen through scams between July 2021 and July 2022, netting perpetrators $300,000 per scam on average. July 2022 saw over 4,600 NFTs stolen – the highest month on record – indicating that scams have not abated despite the crypto bear market.
May 2022 saw the highest confirmed value of NFTs stolen through scams, at just under $24 million.
Source of fraudulent activity:
Social media compromises – particularly of NFT project Discord servers – have surged in 2022, accounting for 23% of all NFTs (close to 5,000, worth around $20 million) stolen this year. The growing availability of tailored malware that can bypass multi-factor authentication is likely to be partially responsible.
There is a growing threat to NFT-based services from sanctioned entities and state-sponsored exploits. This has been emphasized by the $540 million heist from Axie Infinity’s Ronin Bridge by North Korea’s Lazarus Group and the possession of NFTs by the US-sanctioned Chatex crypto asset exchange. Digital assets worth more than $160,000 originating from sanctioned entities have been used to purchase NFTs.
Going forward:
Although crime represents a small proportion of overall NFT trading, it has a disproportionate impact on the industry’s reputation and undermines the quality of experience of legitimate users. NFT marketplaces must be proactive in risk management to mitigate these repetitional risks and issues. Sanctions screening solutions are also becoming increasingly essential for NFT-based platforms.
DeFi: The new frontier of finance - Key trends banks in the Asia Pacific should be watching by VISA
In the Asia Pacific (APAC) region, although decentralized finance (DeFi) remains a nascent sector, consumer adoption of DeFi services is growing rapidly, fueled by the region’s growing blockchain and cryptocurrency startup scene.
2022 survey conducted by Visa and YouGov, which surveyed 16,295 adults in 14 markets, found that 21% of consumers in the Asia-Pacific region have used DeFi services before, a proportion expected to grow by 17% this year, with another 38% express interest in trying out DeFi services in the next six months.
Vietnam, Indonesia and India are among the biggest adopters
The survey results show that while DeFi adoption is growing across the APAC region, users in Vietnam, Indonesia and India were found to be the most open and eager to experiment with DeFi services with 63%, 54% and 50% of respondents respectively in these countries expressing interest in trying out DeFi in the next six months.
Japan (9%), Singapore (17%) and Australia (17%), meanwhile, stood at the other end of the spectrum, recording the smallest shares of users willing to try out DeFi services.
As interest and adoption of DeFi services grows, the sector is also becoming increasingly lucrative for criminals and fraud, Visa notes. In 2021, over USD 10.5 billion was lost from DeFi platforms due to fraud and theft, a 600% increase from the previous year, According to crypto asset risk management firm Elliptic.
In February 2022, Wormhole, one of the most popular bridges that connect the Ethereum blockchain and Solana, wash it off via a hack in which over $320 million worth of cryptocurrency was stolen.
In addition to security risks, the lack of regulation in DeFi services also raises concerns, particularly about consumer protection and anti-money laundering (AML) risks, the report noted.
Moving forward, Visa expects the DeFi movement to create new opportunities for incumbent banks and traditional financial services companies. As use cases continue to evolve and consolidate, it will become possible for financial institutions to later integrate end-to-end solutions.
For example, financial institutions may be able to provide asset securitization and financing for institutional clients within DeFi protocols. They could also start providing services tailored to Web 3.0-based organizations and entrepreneurs, such as underwriting DeFi protocols or risk management and compliance as a service.
📈 Charts of the week
NFTs and fundraising
NFTs have featured prominently in the Ukrainian government’s crypto asset financing efforts including the campaign UkraineDAO which sold an NFT of the Ukrainian flag for $6.75 million. The proceeds were then donated to the government and numerous other charities.
Over 840 NFTs – including a Cryptopunk and numerous other prominent projects – were donated to the government as of May 17th 2022
Monthly trading of NFTs has plummeted in the past 3 months, as the community has become more aware of the tenuous nature of intellectual property ownership and NFTs.
Crypto custody
As the demand from institutional clients for holding and trading digital assets catches up, traditional banks and custodians are developing capabilities within their systems.
This offers custodian banks an opportunity to foray into the digital assets custody space by offering services through a robust, secure, technology-driven crypto custody solution.
Ultimately this will alleviate the information security concerns of the investors. To achieve this, traditional custodians must leverage digital technologies such as blockchain, cloud, and application programming interface (API) frameworks and enhance systems and processes to make them resilient.
💡Inside the Metaverse and NFT's latest news, trends and insights
1. David Clark-Joseph joins PIXELYNX from Liberty Gaming.
PIXELYNX, the music metaverse gaming platform founded by world-renowned electronic musicians Joel Zimmerman aka deadmau5 and Richie Hawtin aka Plastikman, today announced their appointment of David Clark-Joseph as Vice President of Investments.
2. Miley Cyrus and Men’s Wearhouse Register New Web3 Trademarks to Reach Users in the Metaverse
Miley Cyrus plans to offer entertainment services, virtual apparel, cosmetics and more in the metaverse. Men’s Wearhouse hints at opening a virtual retail store and NFT-authenticated virtual goods.
3. M&M’s releases NFT-inspired candy
Candy brand Mars announced that it has signed a deal with Universal Music Group (UMG) label to create limited edition M&M’s based on Kingship, its virtual band made up of Bored Ape Yacht Club and Mutant Ape Yacht Club avatars.
4. Former NFL Legend Michael Vick announced that he has co-founded FanField, a sports tech company that is launching an NFT platform
FanField will partner with some of the biggest names in sports. It will also release digital collectibles and exclusive experiences. Student-athletes can also earn an income via the platform.
5. Samsung expands retailer partnerships for using NFTs as offline shopping rewards
Samsung has made deals with retailers in Korea to promote Galaxy NFTs, which will offer rewards such as discounts in partner stores. The NFTs was launched through a partnership with Theta labs in Q1 2022 with few applied use cases.
6. Hollywood celebrities partner with Sandbox to develop metaverse strategies
Paris Hilton is bringing the Paris World into Sandbox, creating a digital space for fans to interact with her and buy virtual products. Hilton’s company, 11:11 Media, has already established a Roblox platform. She is expanding into a multi-metaverse approach across platforms.
7. Metaverse platform The Sandbox launches its newest alpha season and expects half a million users
The Sandbox metaverse platform launched its Alpha Season 3 on Wednesday with 90 experiences and 100 hours of available gameplay. To increase interoperability throughout the larger crypto and NFT community, the company is also letting participants use any NFT they own.
8. Nike leads other brands in revenue from NFTs
In an NFT brand case study Nike tops the list with $185.32M. The acquisition of RTFKT NFT firms by Nike became the reason for its pioneering. Morgan Stanley's research of last year expected the Metaverse games and NFT market to grow $50B by 2030.
🔦Company spotlight
The company: 👉 RECIKA 👈 a Japanese Web 3 company is launching a real estate NFT, the “ANGO NFT”. It allows users to buy, sell, and own digital real estate NFTs, providing a “home” in the metaverse. ANGO’s digital real estate NFTs are linked to physical real estate, where owners can stay in the real estate in the physical world. The owners will also be included in a DAO (Decentralized Autonomous Organization), where members are able to manage the physical real estate and vote on how to use the revenue from the property.
The story: RECIKA focuses on utilizing blockchain technology to create services that connect both the “physical” and the “digital” worlds. There has been an increase in vacant houses in rural Japan due to the declining Japanese population and also migration to cities. ANGO applies NFTs, metaverse, physical real estate, and DAO to provide a remedy to this issue. Until now, the value of real estate properties was only defined in the physical world. ANGO aims to challenge that and redefine real estate by giving it new meaning and value in the digital world.
Why should I care: ANGO will also run vacation rentals (Airbnb) on the linked physical real estate to generate revenue for the DAO. Widespread adoption of real estate tokenisation, such as ANGO, could result in massive changes to the interaction within the urban environment both from the living but also financial perspective. It provides an opportunity for democratising investment into real assets and expanding home ownership and occupation rates, yet also scope for creating social issues already persistent, including unaffordable housing, local population displacement and gentrification.
📅 Blockchain, Crypto and Web3 events calendar
….for the next couple of months
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
🆕 Seoul Meta Week 2022 | Oct 3-7, 2022 | Seoul, Korea
Blockchain Economy Dubai Summit | Oct 4-5, 2022 | Dubai, UAE
Crypto Expo Dubai | Oct 5-6, 2022 | Dubai, UAE
Blockchain Expo North America | Oct 5-6, 2022 | Santa Clara, US
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
World Blockchain Summit Dubai 2022 | Oct 17-18, 2022 | Dubai, UAE
🆕 Vietnam Blockchain Summit | Oct 19-20, 2022 | Hanoi, Vietnam
🆕 Bitcoin Collective | Oct 21-22, 2022 | Edinburgh, GB
🆕 Money20/20 | Oct 23-26, 2022 | Las Vegas, US
🆕 Blockchain Expo Tokyo | Oct 26-28, 2022 | Makuhari Messe, Japan
👩💻The job fair
Messari is hiring 1) Market Data and 2) Media Software Engineers - Compensation: $120k - $200k (Remote - US)
dYdX is hiring a Backend Software Engineer (Remote)
Stakefish is hiring a Backend/ Full-stack Software Engineer, Front-end Software Engineer, DevOps Engineer (Remote)
Boardroom Labs is hiring a DAO Governance Software Engineer (Various locations/ Remote)
Ethereum Foundation is hiring a Front End Developer (Remote)
📎 Miscellaneous Resources
Coinbase is adding support for Coinbase Wrapped Staked ETH on the Ethereum network
A thread on the biggest paradigm shift in how we will value crypto tokens going forward
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.