Dorsey's Bluesky, Moola $8.4M exploit, SocGen, BNY, and J.P. Morgan on tokenization, a16z re MakerDAO, Copper $196M and Uniswap $165M rounds, latest on Stablecoin bill, TLDR re DAOs, house on OpenSea.
19 October 2022
Hello there and welcome to the Blockchain From First Principle newsletter where we curate some of the week's news, summarise reports, 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 20 news you should be aware of
💸PE/VC funding
⚖️Policies and laws
📚Reports, here is the TLDR
📈Charts of the week
💡Metaverse and NFT news, trends, and insights
🔦Company spotlight
📅Blockchain, Crypto, and Web3 events calendar
👩💻The job fair
📚The terms of the week
📎Miscellaneous resources
🗞️ The 20 news you should be aware of
1. New Blockchain Aptos unveils controversial Tokenomics, APT Incentive Plans
Aptos has published a summary of its token distribution and incentive plans. The initial total supply at the mainnet launch was 1 billion, with around half of that distributed to community members and the rest to core developers, the Aptos Foundation, and private investors. 125 million APT from the Aptos Foundation fund will be used to support ecosystem projects, grants, and community growth initiatives.
2. Meta platforms follow Blockchain firms in joining cryptographic privacy Group MPC Alliance
The Facebook parent joins the likes of Bolt Labs, Ciphermode Labs and Partisia Blockchain in becoming a member of the group. The MPC Alliance is made up of 59 members, including Alibaba Group, engineering firm Bosch and a slew of blockchain firms, including Bolt Labs, Ciphermode Labs and Partisia Blockchain.
3. Aave releases technical details of GHO Stablecoin
Aave has released a technical paper on its upcoming GHO stablecoin along with the results of its first security audit.GHO is an overcollateralized dollar-backed stablecoin that was proposed in July. The project was greenlit by the community on July 31 with near-unanimous support. Aave is DeFi’s fourth-largest protocol with over $5B in total value locked (TVL).
4. The next major Ethereum upgrade, Shanghai, now has a testnet
The Shandong testnet, the testnet for Ethereum's Shanghai upgrade, is now live. The Shanghai upgrade is projected to happen in 2023. It will include several Ethereum Improvement Proposals aimed at addressing some efficiency and scalability issues. The upgrade will also allow those who have staked ETH on the Beacon Chain to withdraw their stake and rewards.
5. Buffett-backed Nubank to launch its own cryptocurrency in Brazil
Nubank will launch a token, called Nucoin, in the first half of 2023. Nubank said it would invite 2,000 customers to take part in a forum group for guiding the development of Nucoin.
6. Decentralized social media project Bluesky unveils latest protocol
The decentralized social media platform backed by Twitter founder Jack Dorsey, Bluesky, revealed documentation and announced the Authenticated Transport (AT) Protocol.
7. Ripple begins testing XRP ledger sidechain that’s compatible with Ethereum smart contracts
Ripple has deployed an EVM-compatible sidechain on the company's devnet. Developers can now test their apps before the network goes live. The EVM sidechain will become permissionless in early 2023. Ripple plans to fully launch the sidechain in the second quarter of next year.
8. DeFi lending protocol Moola Market hit by $8.4 million exploit
Moola Market paused operations. According to Igor Igamberdiev, the exploiter used 243,000 CELO tokens originating from Binance and in turn loaned 60,000 CELO to Moola to borrow 1.8 million MOO for use as collateral. With the remaining CELO, the exploiter pumped the price of MOO and proceeded to use the borrowed MOO as collateral to borrow tokens across a series of other DeFi lending protocols.
9. SocGen Forge receives digital assets license, including custody
The license includes custody, purchase/sale of digital assets for legal tender and the trading of digital assets against other digital assets. Rather than cryptocurrencies, SocGen Forge is squarely focused on tokenized financial assets such as stocks and bonds.
10. BNY Mellon, and others object to caps for EU DLT regime for tokenized securities
In March 2023, the EU DLT Pilot Regime commences, enabling regulated tokenized securities to be traded using blockchain technology. Market participants are concerned about monetary caps, the potential six-year duration of the sandbox and uncertainty about what happens at the end.
11. Onyx by J.P. Morgan to tokenize euro deposits soon. Sees NFT opportunity
J.P. Morgan already enables tokenized U.S. dollar deposits with JPM Coin. Now it plans to enable blockchain-based Euro deposits ‘soon’ said Basek Toprak, head of Coin Systems at Onyx by JP Morgan. The bank is also looking at the potential of Web3 more broadly.
12. IRS expands key US tax language to include NFTs
Newly released draft instructions for the 2022 tax year change the language from “virtual currency” to broader “digital assets.” to include NFTs and virtual currencies, such as cryptocurrencies and stablecoins. The final tax instructions haven’t yet been released, so the crypto section could still be tweaked before it’s official.
13. Mastercard offers crypto trading solutions to banks with Paxos
Mastercard has announced Crypto Source, which enables banks to offer cryptocurrency trading to their clients. Paxos will provide the brokerage services and custody with Mastercard performing the integration with bank interfaces
14. Coinbase piles on support for Grayscale's EFT in an effort to reverse SEC's rejection
In June, the SEC denied Grayscale's application to convert its flagship Grayscale Bitcoin Trust (GBTC) into an ETF from a trust. Grayscale then filed a lawsuit against the regulator. Trade groups said a spot bitcoin ETF was "ideally suited" for investors seeking exposure to the cryptocurrency.
15. SBI and Securitize to collaborate for tokenized bond issuance in Singapore
SBI and Securitize together will target blockchain-based issuance and distribution services targeting institutional investors. SBI a subsidiary of SBI digital asset Holdings recently got capital markets services (CPM) license from the Monetary Authority of Singapore (MAS).
16. BVNK secures Spanish registration for European expansion
BVNK wants to make the use of crypto financial services more accessible, helping its clients manage treasury, payment and investment operations for digital assets from a single account. In May, the firm closed a $40 million Series A fundraising round at a $340 million valuation.
17. Mango Market's DAO forum set to approve $47M settlement with hacker
Hackers voted on the bases of millions of tokens stolen from the exploit. The proposed terms reveal that $67 million of the stolen tokens will be returned and there would be no charge against them. 98% voted in favor of the deal. They also demanded not to pursue any criminal investigation or the freezing of funds.
18. a16z doesn’t support plan to break up DeFi giant MakerDAO
In the Middle of makeovers, Venture capital giant Andreessen Horowitz (a16z) is not in agreement with vision of founders to break maker DAO into small pieces. A16z owns a significant amount of MKR tokens as an investor and therefore boasts voting power and influence on which proposals will eventually gain approval.
19. Binance launches $500M lending project to support crypto miners
Binance Pool, a mining subsidiary of Binance, launched a fund to provide loans to private blue-chip Bitcoin crypto miners. The tenure of the loan extends from 18 to 24 months with an interest rate bracket of 5% to 10%, depending on the credibility of the borrower and digital and physical assets in the vault.
20. Israel to test Blockchain-Based Bonds
Office of the Accountant General in the Ministry of Finance and the only Tel Aviv Stock Exchange of Israel will issue bonds via a permissioned private distributed ledger technology platform being readied for live testing. The experiment will remain entirely centralized for now and is compatible with EVM.
💸 PE/VC funding
1. WazirX founder’s blockchain project Shardeum raises $18M
New Layer 1 blockchain Shardeum closed its $18.2 million seed funding round at a $199 million valuation. The startup is co-founded by Nischal Shetty, who founded Indian exchange WazirX, and blockchain architect Omar Syed.
2. Web3 Builders raises $7M in effort to make web3 safer for all
Web3 Builders Inc. has raised $7 million in seed funding and launched its first product, TrustCheck. Founded by a former Amazon Web Services executive, Web3 Builders aims to provide an anti-scam tool and make web3 safer for all.
3. ChainSafe raises $18.8M to build long-lasting blockchain dev tools
The lead investor in the round is Round13. Other investors include ConsenSys and HashKey Capital. Other investors in the round include ConsenSys, HashKey Capital, NGC Ventures and Digital Finance, according to a company release.
4. Abrdn backed digital asset exchange Archax raises funds at $170M valuation
Archax plans to launch its institutional digital asset exchange in the current quarter, covering both cryptocurrencies and digital securities. It has FCA regulatory approval to operate a multilateral trading exchange, provide custody and a crypto-asset AML license.
5. Polkadot synthetic asset protocol Tapio raises $4M from Polychain
The seed round led by Polychain, Hypersphere and Arrington. Other participants in the raise include Spartan, LongHash, 0xVentures, CMS, D1 Ventures, 11-11 DG Partners, Genblock, Valhalla, PAKA and Double Peak.
6. Tilia secures strategic investment from J.P. Morgan, spins out of Linden Lab
Tilia’s solution handles payment processing, in-game transactions, as well as payouts to creators by converting in-world tokens to fiat currency including USD. In addition to the investment, Tilia is also working with J.P. Morgan Payments to increase payout methods and expand the number of pay-out currencies.
7. Crypto custodian Copper raises $196M in series C funding round
The firm hired former Bank of America Merrill Lynch pros in April to build out its prime infrastructure offerings and other top traditional finance veterans too. The European bank Barclays bought into Copper’s latest raise at a $2 billion valuation, Sky News reported in July.
8. Uniswap’s $165M funding round a bright spot for DeFi in Crypto Winter
The $165 million Series B round was led by Polychain Capital and values the company at $1.66 billion. Other backers of the raise include previous investors Andreessen Horowitz, Paradigm, SV Angel, and Variant. The round is to expand Uniswap’s product offerings and “become financially sustainable in coming years”.
9. Crypto asset manager BlockTower launches $150M VC Fund
The capital will support DeFi and blockchain-infrastructure projects with BPI France and MassMutual among its financial backers. Recent BlockTower investment includes layer 1 blockchain Aptos and institutional finance network Maple Finance.
10. Stellar Development Foundation launches $100M fund to support native smart contract adoption
SDC is a nonprofit organization supporting the development of the Stellar network to overcome the “friction” of other blockchain networks and attract more builders to the Stellar network. The Soroban Adoption Fund incentivizes developers to begin building products and tools on the new smart contract platform.
11. Crypto and digital bank MinePlex secures $100M in funding from GEM
The platform offers fiat and crypto assets services within the same application, enabling transactions such as bill payments as well as purchases in crypto assets. Aimed at closing the gap between digital assets and traditional banking, the funding will be used in new banking technologies, including a collaboration with Mastercard and Visa for crypto transactions.
12. Crypto investments platform Pillow collects $18M
With more than 75,000 users in over 60 countries, crypto investments platform Pillow is creating simple, transparent, accessible products including crypto investing, crypto savings, crypto payments, and other financial services. The company secured a Series A fund of $18M co-led by Accel, Quona Capital, Elevation Capital, and Jump Capital.
⚖️ Policies and laws
1. Japan's crypto regulator plans to ease token listing rules
The Japan Virtual and Crypto assets Exchange Association plans to allow exchanges to list tokens without going through this lengthy process. Currently, 50 crypto assets are allowed to be traded in Japan, as per its regulatory rules. With relaxation in rules, the listing of tokens would take max two to four weeks.
2. Stablecoin bill is 'not happening this Congress' says, Rep. Himes
Himes, who sits in the house financial service committee remarks “crypto bill is not passing any time soon” during CoinDesk’s Investing in Digital Enterprises and Assets summit. For months, lawmakers on the House Financial Services Committee have been negotiating new regulations for stablecoins.
3. EU Commission warns crypto mining may be halted in energy emergency
The European Commission announced that the European Union’s member states must prepare to halt crypto mining “in case there is a need for load shedding in the electricity systems”, according to an action plan on digitalizing the EU's energy system released on Tuesday.
4. Senate committee negotiating SEC sign off on digital commodity definition
The Senate Agriculture Committee is negotiating changes to a bill that would grant the Commodity Futures Trading Commission more power over bitcoin and other digital assets, in preparation for a potential committee vote before the end of this Congress.
5. FCA's crypto AML Compliance Chief steps down
Mark Steward is stepping down as the U.K. Financial Conduct Authority's executive director of enforcement and market oversight. The FCA did not reveal who will be replacing Steward
6. Australian regulator suspends Holon's Crypto Funds managed by Gemini
The decision was taken by the Australian Securities and Investment Commission (ASIC) due to non-compliant target market determinations (TMD) by Holon Investments. The regulator believes Holon's crypto funds are not suited to the wide target market defined in their TMDs, which include investors ranging from potentially medium, high, or very high risk and return profiles.
7. Janet Yellen stresses the need for Central Bank Digital Currency work
S. Treasury Secretary Janet Yellen on Wednesday reiterated the importance of building a regulatory framework for digital assets, referencing Terra as one possible danger and the tether stable coin's “breaking the buck ”as a result of the crypto crash. Yellen said she would like to work with Congress to fill those holes as digital finance is “a tough thing to regulate.
📚 Reports, here is the TLDR
DAOs are disrupting investment, corporations, social clubs, and even political parties. If you want to know how DAOs are shaping democracy, and corporations, this report is a must-read.
As of mid-2022, there are currently over 4,000 active DAOs with a market capitalization of around $20 billion.
Cointelegraph Research identified three eras of the evolution of DAOs where 1.0 was the pre-Digital Revolution and Bitcoin, 2.0 was the advent of blockchain smart contracts, and 3.0 was an explosion of DAO infrastructure growth.
There was an early example called “The DAO” which was hacked in 2016 for $60 million worth of Ether and eventually caused a major fork. Today, this split can be seen in the different protocols of Ethereum Classic and Ethereum.
In 2022, 40% of all DAOs are focused on decentralized finance (DeFi), but this is not the only application of a DAO.
DAOs can be applied to all different spaces, including gaming (5%), politics (4%), art & culture (6%), and the second largest focus for DAOs are nonfungible tokens (NFTs) at 17%.
Ethereum is the most popular blockchain for building DAOs, with 83 of the top 100 governance tokens by market capitalization.
There are two aspects to the Venture Capital (VC) side of a DAO: VC investment in DAOs and DAOs as the VCs themselves. VC investment into the DAO space reached a local peak in Q1 2022 at over $160 million.
From 2020 to mid-2022, there were 60 DAO and DAO infrastructure firms that received investments from venture capital. Here the top 10 projects.
DAOs have respectable treasuries. Uniswap has a liquid treasury of around $1.5 billion, and BitDAO is sitting on $1.3 billion at the time of writing.
Over 50% of DAOs hold USD Coin (USDC) (a cryptocurrency pegged to the United States dollar on the Circle protocol), with close to 45% of DAOs holding MakerDAO’s stablecoin, Dai, and over 40% hold Wrapped Ethereum (wETH).
Alien Worlds, an NFT game where six different DAOs interact in the game and compete over limited resources, is the highest active non-DeFi decentralized application (DApp) by transaction volume, according to DappRadar.
“Legal anchoring” may still be required. Governments do not really have a good handle on what a DAO is and how to deal with the issues of liability, culpability, and taxation.
📈 Charts of the week
Third-quarter blockchain venture deal size from The Block Research
The below chart shows some of the technology that is part of DeFi
Decentralized Finance currently has $54.07 billion in total value locked. DeFi is a new financial system for conducting financial transactions without having to have an intermediary such as a financial institution to certify but using blockchain technology and other computer systems such as smart contracts.
The below chart shows that Circle's USDC market cap drops below $50 billion for the first time since Terra's collapse
The below figure shows the most active investors' crypto deals in Q3’22
The Below chart shows the most active investors deal by vertical in Q3'22
💡Metaverse and NFT news, trends, and insights
1. Ozzy Osbourne, Soulja Boy to join Decentraland Metaverse Music Festival
Decentraland will introduce a variety of new metaverse experiences between shows. The inaugural event in 2021 claimed over 50,000 unique attendees. But questions still remain about how many people use the platform.
2. French licensing association Sacem unveils blockchain music IP protection
Sacem launched Music start to enable musicians to protect IP rights. At this stage, Music Start isn’t providing a royalty mechanism. Instead, it provides protection of intellectual property (IP) rights by logging a piece of music on a blockchain and providing it with a timestamp.
3. Paris Hilton-backed web3 company plans virtual real-estate game for adults
Everyrealm’s new game Hometopia aimed at mature gamers who like home building and design. Free-to-play game set to launch this year on Epic Games Store should appeal to female gamers, the company says.
4. Digital platform sells house as an NFT on OpenSea
Roofstock, a digital real estate platform, sold a single-family home in South Carolina for $175,000 via OpenSea. The sale was settled using the USDC stablecoin and financed by USDC Homes, a lending pool operating on the Polygon deployment of Teller.
5. ApeCoin DAO mulls APE staking delay, addition of bug bounty program
Bored Ape Yacht Club is set to launch staking for its NFTs and ApeCoin later this month. A proposal on the ApeCoin governance forum recommends the launch be delayed for up to a month to add a bug bounty program.
6. Magic Eden flip-flops on Solana NFT royalties, making them optional
Now traders don’t need to pay creator royalty on Magic Eden Market Place. The marketplace lost a significant market share and took this step to regain its ranking. Magic Eden stood at 58% market share on NFT market and 86% of Solana NFT trading.
7. CoinShares releases an experimental AI bot that tries to calculate the fair price for an NFT
The digital asset management platform said the new tool aggregates different data sets to determine how much an NFT on OpenSea might be worth. But some users weren't happy with lower-than-expected numbers.
8. Anthony Hopkins NFT sells-out in 7 minutes
Called “The Eternal Collection,” the project was launched in collaboration with NFT design agency Orange Comet, and featured 1000 original cinematic art pieces inspired by different performances of the actor over his film acreer.
9. Ripple unveils latest recipients of $250M NFT Creator Fund
The amount is committed to providing creators with the financial, creative, and technical support needed to create NFTs and other tokenization projects on the XRP Ledger. This round of recipients included companies like 9Level9 Productions, Anifie, Capital Block, NFT Avatar Maker, NFT Master, SYFR Projects and ThinkingCrypto.
10. Metaverse platform Mona rolls out new AI tool to help build in online worlds
The AI Material Designer will allow creators on Mona to generate textures for objects using a text description. Creators can generate textures for objects using a text description rather than code.
11. Ukrainian art museum to preserve art and cultural heritage through NFT auction
The Kharkiv Art Museum launched a new NFT collection on the Binance NFT marketplace to help raise funds for operations and the preservation of cultural heritage.
🔦Company spotlight
The company: 👉 Int3face 👈 is the result of a Cambridge University research group whose core objective is to increase awareness of blockchain technology and facilitate its mass adoption. Creating a collaborative aggregation of protocols, offer users unique insight into the benefits of coordinated blockchain infrastructure on a simple and elegant user interface.
The story: The proof is in the pudding. Having already built an industry-leading cross-chain DEX aggregator with speeds and safety eclipsing any known competition, Int3face is now widening its competitive advantage. We are leveraging our unique modular design by drawing upon centralized and decentralized protocols to expand liquidity and services, ensuring we remain project agnostic whilst offering an industry-leading experience.
Why should I care: The ultimate goal is to create equitable opportunities for wealth accumulation and access to the next generation of technology. Int3face is pioneering research in creating a collaborative infrastructure to benefit even the most socioeconomically excluded communities. Our first example of this is a payments gateway for the unbanked. By creating access to novel technologies and stable currencies in a safe and accessible manner, we propagate opportunities only currently accessible to the most privileged societies.
📅 Blockchain, Crypto, and Web3 events calendar
….for the next couple of months
I.D.E.A.S. 2022 | October 18–19 | NYC, US
Crypto Asset Conference 2022 | October 18–19 | Frankfurt, Germany
Vietnam Blockchain Summit | Oct 19-20, 2022 | Hanoi, Vietnam
Canadian Blockchain Summit | Oct 19-20, 2022 | Calgary, AB, Canada
🆕 Blockchain Law for Social Good | Oct 20-21, 2022 | San Francisco, CA
Bitcoin Collective | Oct 21-22, 2022 | Edinburgh, GB
🆕 Litecoin Summit | Oct 21-23, 2022 | Las Vegas, US
🆕 HONEYCON | Oct 23-24, 2022 | Shibuya-ku, Tokyo
Money20/20 | Oct 23-26, 2022 | Las Vegas, US
Blockchain Expo Tokyo | Oct 26-28, 2022 | Makuhari Messe, Japan
Plan ₿ Forum | Oct 28-29, 2022 | Lugano, Switzerland
ETH Lisbon | Oct 28-30, 2022 | Lisbon, Portugal
San Francisco Blockchain Week | Oct 31-Nov 6, 2022 | San Francisco, CA, USA
LA Blockchain Summit | Nov 1-3, 2022 | Los Angeles, CA, USA
Blockchain Economy Summit | Nov 1-3, 2022 | Los Angeles, CA, USA
Florida Bitcoin & Blockchain Summit | Nov 4, 2022 | Tampa, FL, USA
Solana Breakpoint 2022 | Nov 4-7, 2022 | Lisbon, Portugal
Web3 & Blockchain World (W3B) | Nov 8-9, 2022 | Toronto, Canada
Crypto Nexus | Nov 8, 2022 | San Francisco, CA, USA
Blockchain Economy Summit | Nov 10-11, 2022 | Barcelona, Spain
Pacific Bitcoin | Nov 10-11, 2022 | Los Angeles, CA, USA
Istanbul Blockchain Week | Nov 14-17, 2022 | Istanbul, Turkey
Adopting Bitcoin | Nov 15-17, 2022 | San Salvador, El Salvador
ETH Gathering Barcelona 2022 | Nov 17-21, 2022 | Barcelona, Spain
Cardano Summit 2022 | Nov 19-21, 2022 | Lausanne, Switzerland & Online
Next Block Expo | Nov 23-24, 2022 | Berlin, Germany
NFT Fest Aus 2022 | Nov 23-24, 2022 | Melbourne, Australia
DCentral Miami 2022 | Nov 28-29, 2022 | Miami, FL, USA
Decipher 2022 | Nov 28-30, 2022 | Dubai, UAE
MiamiWeb3 | Nov 28-30, 2022 | Miami, FL, USA
Nordic Blockchain Conference | Dec 1, 2022 | Copenhagen, Denmark
Blockchain Expo Global | Dec 1-2, 2022 | London, UK
Africa Bitcoin Conference | Dec 5-7, 2022 | Accra, Ghana
🆕 Future of Crypto by Benzinga | Dec 7, 2022 | NYC, US
Israel Crypto Conference | Dec 7-8, 2022 | Tel Aviv-Yafo, Israel
CoinAgenda Caribbean 2021 | Dec 7-9, 2022 | San Juan, Puerto Rico
World Blockchain Summit Bangkok | Dec 8-9, 2022 | Bangkok, Thailand
🆕 Taipei Blockchain Week | Dec 12-17, 2022 | Taipei, Taiwan
🆕 MetaVentures Bangkok | Dec 14-15, 2022 | Bangkok, Thailand
👩💻The job fair
2048 Ventures - Analyst - Toronto/NYC/East Coast
Talley Labs - Full stack engineer - Los Angeles/Remote
RDX Works - Senior Software Engineer - London
RDX Work - Developer community Liaison - London
Binance - PMO Manager - Europe/Remote
Ripple - Defi researcher - San Francisco
📚The term of the week
Blockchain protocol
Protocols are sets of rules through which data is shared between computers. For cryptocurrencies, protocols establish the structure of the blockchain itself, i.e. the distributed database allowing the benefits of digital money being securely exchanged on the internet. Protocols are the mechanisms through which cryptocurrencies are decentralized via the blockchain and spread across a network of computers with no central hub or authority.
📎 Miscellaneous Resources
Victims claim Coinbase didn't protect them from losing $21 million in a crypto scam
Do technology executives really see blockchain in their future?
Lido Co-Founder’s Comments Spark Debate Over Decentralization of Ethereum
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