Binance & FTX TLDR, HSBC Bond Blockchain, Andiami, Coinbase & BaFin, Solana phone, Microsoft Wemade’s $46M, LeadBlock $150M fund, ECB programmable money, Unpacking Money 20/20, Why DeFi on Bitcoin.
9 November 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 11 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
📅Blockchain, Crypto, and Web3 events calendar
👩💻The job fair
📚The terms of the week
📎Miscellaneous resources
🗞️ The 11 news you should be aware of
1. Binance to acquire FTX outside US after liquidity crunch
Binance is acquiring FTX.com, the non-U.S. arm of the FTX cryptocurrency exchange following a rash of liquidations at the FTX exchange since Sunday. We have covered a detailed report in the TLDR section below 👇
2. Multicoin Capital hit by FTX collapse, its fund's AUM stuck on the exchange
Multicoin Capital, one of the top crypto-focused venture capital firms, is significantly impacted by crypto exchange FTX's collapse, a letter obtained by The Block shows.
3. Japan’s NTT Docomo partner Accenture, will invest $4 billion in web3, use DAOs
In a major web3 initiative partnering with Accenture, Docomo committed to investing around $3.4B to $4B over a period of the next 5 to 6 years. It plans to engage a variety of industries by using decentralized autonomous organizations (DAOs).
4. Dubai presses for crypto companies to set up shop
Dubai is heavily recruiting crypto companies to establish themselves there, but the Middle Eastern nation isn’t quite ready for them. Regulations aren’t clear yet and getting something as basic as a bank account isn’t a smooth process – at least for now.
5. HSBC to launch Orion blockchain bond tokenization platform
HSBC announced plans to launch HSBC Orion, its DLT-based bond tokenization platform. European Investment Bank (EIB) might use it to issue a GBP tokenized bond under Luxembourg law. The solution enables the tokenization of both the digital bond and the currency used for settlement, enabling atomic settlement.
6. Ethereum co-founder Di Iorio unveils new project to bring blockchain computers to a wider audience
Anthony Di Iorio, the co-founder of Ethereum unveiled a project he’s envisioned, designed, and built over the span of a decade. The project, dubbed Andiami, blends game theory with cutting-edge hardware to bring blockchain computers to a wider audience. The project's tentative timeline extends to 2025
7. Bitcoin, crypto-linked equities resume falling despite Binance/FTX Deal
A volatile session has whipsawed Bitcoin (BTC) and crypto-related stocks such as Coinbase (COIN) and MicroStrategy (MSTR) after the deal announcement. BTC had sunk to the low-$19,000, bounced back to $20,500 after the deal was disclosed, but is now down over 12% to around $18,257. ETH also fell over 15% to $1,340.
8. Coinbase Germany ordered to address risk management by BaFin
BaFin indicated violations of the German Banking Act, pointing at two particular sections. One section outlines requirement for sustainable development, risk strategy and protecting internal capital adequacy. Also, Coinbase shall “ensure ongoing appropriate and effective risk management including outsourced processes.
9. Pre-production Solana phone to ship to developers in December.
Around 3,500 developer-focused kits have been manufactured and are boxed up, the phones will let developers in the Solana ecosystem test decentralized applications for the Solana dApp store, developer kits will be sent out first to holders of the Saga Pass, a membership NFT given to early adopters of the phone.
10. Circle is bringing Euro Coin to Solana in the first half of 2023.
With this move, Payments firm Circle expanding its cross-chain protocol to Solana in the first half of 2023. Circle only launched Euro Coin as a European take on its popular stablecoin USDC in June. Euro Coin works in the same way but is pegged to the euro instead of the dollar. It’s currently live on the Ethereum blockchain.
11. Google Cloud is running a Solana Validator, Blockchain node engine to support SOL chain next year
Google's cloud division is working with Solana to bring its Blockchain Node Engine to the Solana chain. The company is operating a block-producing Solana validator to participate in and validate the network. Google Cloud will be indexing the Solana blockchain and bringing the data to Big Query next year. Some people have criticized Google's mission to host Solana nodes in the cloud as it will result in more centralization.
💸 PE/VC funding
1. Fordefi has raised $18M in a seed round led by Lightspeed Venture Partners.
Fordefi has raised $18 million in a seed round led by Lightspeed Venture Partners. The web3 startup is building an institutional multi-party computation (MPC) wallet for transacting on decentralized apps.
Eterlast raises a $4.5 million seed round backed by Immutable X, Supernode Global, Play Ventures, Active Partners, Stake Capital, and Founders Factory. The blockchain startup based in London and Barcelona will use the funds to build NFT gaming experiences.
3. Wemade has accelerated its web3 push with a $46M fundraising
South Korean video game maker Wemade has a $46 million funding round backed by Microsoft and locally-based investment managers Shinhan Asset Management and Kiwoom Securities.
4. Former Bain Capital investor launches $30M Web3 Fund
Magdalena “Mags” Kala has launched a $30 million fund to invest in early-stage web3 startups. She will run Florida-based firm, Double Down as a solo general partner (GP).
5. Web3 gaming infrastructure startup Xternity raised $4.5M in a pre-seed funding round.
NFX, a pre-seed and seed-stage-focused venture capital firm based in Israel, led the round. Other investors included Jibe Ventures, Flori Ventures, Secret Chord Ventures and vGames.
6. Dhiway, a blockchain startup has raised $1M in the pre-seed round
Dhiway, an India-based blockchain startup, has raised $1 million in a pre-seed round led by Cornerstone Venture Partners Fund, SUNiCON Ventures and existing shareholders.
7. Drivetime pivots to Blockstars and raises $5M
The company raised the funding through a combination of an equity and token financing round led by Play Ventures through its Future Fund.
8. Crypto exchange Coinmetro raises $7M at $180M valuation
Coinmetro, a crypto exchange located in Estonia has raised 7 million euros ($7 million) in a strategic funding round backed by three angel investors and 100 existing shareholders.
9. European crypto venture firm LeadBlock Partners hits first close of $150M fund
Through its first fund, the firm backed Yuga Labs, Bitpanda and BlockFi. Founding partner David Chreng-Messembourg is looking to draw on his experience working with market makers and exchanges to help crypto founders at the pre-token generation or pre-listing phase.
⚖️ Policies and laws
1. US Treasury adds to Tornado cash sanctions with North Korea WMD allegations
The U.S. Treasury Department is "redesignating" Tornado Cash as a sanctioned entity, overtly alleging that North Korea has used the crypto mixing service to support its weapons of mass destruction (WMD) program. Tornado Cash's founders, DAO members and users were not sanctioned "at this time
2. Bank of Korea finds performance issues with CBDC blockchain tech
BOK found the overall performance of the Ethereum-based blockchain insufficient, including the scaling solutions and privacy technology that was tested. One of its tests simulated peak demand by sustaining 4,200 transactions per second (TPS) for 30 minutes. At that activity level, users sometimes had to wait up to a minute for a response.
3. Russian state may issue tokenized bonds, central bank digital asset consultation reveals
The Central Bank of Russia published a consultation document on regulated digital financial assets (not crypto) in which it considers the issuance of government bonds and sub-federal loans. The central bank is planning to commence its digital ruble pilots next year
4. ECB canvases for digital euro programmable money use case
The European Central Bank (ECB) opened a call to payment industry experts for digital euro use case ideas around programmable money for retail payments. It is also canvassing for input on standards and the back-end IT architecture needed. There’s a short timeframe with submissions needed by November 18.
5. Canada begins consultation on CBDCs, Stablecoins, and Cryptocurrencies
The Canadian federal government has set up a consultation process for CBCDc’s, Stablecoins, and crypto. This was revealed in the 2022 Fall Economic Statement, released on November 3rd. Most countries with large users are taking steps toward regulation to create a framework for proper operations and accountability.
6. Digital euro may have transaction limits and store-of-value caps
The European Union’s potential central bank digital currency may have low transaction and storage thresholds for individual users. Exact limits are not set in stone — as the digital euro project is still in an investigation phase within the ECB.
📚 Reports, here is the TLDR
Is the FTX sale to Binance rocking crypto investor confidence?
Less than 48 hours ago, we as many of Silicon Valley’s VC firms, would have had no problem investing our money in the crypto exchange FTX.
News over the weekend triggered a rush of withdrawal requests on Monday, forcing FTX to look for fresh money to fill a $6 billion financial hole.
That was seen as an opportunity by Changing Zhao (CZ) - who had tweeted about selling its holdings of FTX’s native token, FTT over the weekend - to acquire its biggest rival FTX in what we can fairly describe as a fire sale.
Whether the deal goes through or not, the situation doesn’t look good for venture firms invested in FTX. The purchase price would likely come at a steep discount to the $32 billion valuation that FTX received in late January. But who are those impacted ventures? Binance was an early investor in FTX. The company has also received backing from Temasek, Paradigm, the Ontario Teachers' Pension Plan, SoftBank, and Tiger Global.
Robert Le, a crypto and fintech analyst at PitchBook, believes that the impact for crypto VCs will be significant and it won’t help with LP confidence in the crypto space.
While we watch the US probes the FTX empire over handling client funds and lending, we can’t help but wonder if FTX will be able to pull itself back or what the real extent of the knock-on effect will be.
How Decentralized Finance applications are coming to Bitcoin
For this research paper, Insight DeFi has set out to explore the emerging multi-layered infrastructure that is already being built on Bitcoin. Driven by the pursuit to evaluate DeFi on Bitcoin, Insight DeFi takes a closer look at its great promises as well as its underlying risks and challenges. The paper covers:
Why DeFi on Bitcoin
Bitcoin’s Multi-Layered Financial System
Bitcoin Sidechains & How to Evaluate Them
The Rise of dApps
Sidechains vs Second Layer Protocols
Investors, experts, innovators, and regulators gathered at the Money 20/20 conference in Las Vegas to discuss their top priorities amid a more cautious economic environment. PitchBook analysts Rudy Yang and James Ulan share insights on the fintech, payments, and cryptocurrency sectors. Here are the key takeaways:
Consumer experience, fraud and cybersecurity, and data permissions remained at the forefront of this year’s discussions.
The fintech industry is now level-setting, with valuations mean-reverting and capital becoming increasingly constrained. Despite the challenging market, financial services companies are still investing in technology, and investors are still considering bold opportunities.
The Consumer Financial Protection Bureau (CFPB) will look to place requirements on financial institutions that offer transaction accounts in an attempt to regulate open banking and ensure that shared consumer data is more secure. Under this new rule, consumers stand to benefit from increased competition.
Banking as a service (BaaS) and embedded finance still present strong opportunities as fintech companies focus on the consumer experience and new industries such as cannabis, sports betting, and adult content open up to banking.
FedNow continues to be seen as a service that will modernize payments in the US and enable greater efficiencies for both consumers and businesses. In addition, the Federal Reserve (the Fed) sees the service being implemented as a base infrastructure upon which fintech companies can build.
📈 Charts of the week
Overall crypto adoption slows worldwide in bear market but remains above pre-bull market levels
FTT, the exchange token of FTX, has fallen -78% over the last 24 hours
The below figure shows different types of stablecoins in existence
According to CoinMarketCap, there are 134 stablecoins. The top 3, USDT, USDC, and BUSD represent +90% of the total stablecoins market cap ($148 billion).
History of Asset and Money Representation by J.P. Morgan, DBS Bank and SBI Digital Asset Holdings
💡Metaverse and NFT news, trends, and insights
1. Polo Ralph Lauren enters Metaverse
Ralph Lauren is the latest big brand to enter the metaverse by collaborating with the video game Fortnite. The partnership includes items for both in the game and in the real world.
2. Rolex enters metaverse with crypto and NFT trademark applications
The luxury watchmaker’s trademark application suggests plans to introduce NFTs, NFT-backed media, NFT marketplaces, crypto keys and transactions, virtual goods auctions, as well as virtual and cryptocurrency exchange.
3. OpenSea creates tool to help NFT collections enforce royalties on-chain
OpenSea laid out its plan for helping creators on its platform enforce creator fee payments. “We’re interested in making a better system,” OpenSea CEO Devin Finzer said in an interview with The Block.
📅 Blockchain, Crypto, and Web3 events calendar
….for the next couple of months
Web3 & Blockchain World (W3B) | Nov 8-9, 2022 | Toronto, Canada
TOKEN2049 London | Nov 9-10, 2022 | London, UK
Blockchain Economy Summit | Nov 10-11, 2022 | Barcelona, Spain
🆕 Democracy 4All Conference | Nov 10-11, 2022 | Barcelona, Spain
Pacific Bitcoin | Nov 10-11, 2022 | Los Angeles, CA, USA
🆕 LABITCONF | Nov 10-13, 2022 | Buenos Aires, Argentina
Istanbul Blockchain Week | Nov 14-17, 2022 | Istanbul, Turkey
🆕 Philippine Web3 Festival | Nov 14-18, 2022 | Manila, Philippine
Digital Assets Week London 2022 | Nov 15-16, 2022 | London, UK
Adopting Bitcoin | Nov 15-17, 2022 | San Salvador, El Salvador
ETH Gathering Barcelona 2022 | Nov 17-21, 2022 | Barcelona, Spain
Metamorphosis | Nov 18-20, 2022 | 2022 Bangalore, India
Cardano Summit 2022 | Nov 19-21, 2022 | Lausanne, Switzerland & Online
Blockchain: Applied - An Introduction to Web3 | Nov 20, 2022 | London, UK
🆕 Finance Magnates London Summit 2022 | Nov 21-23, 2022 | London, UK
Dutch Blockchain Week 2022 | Nov 21-27, 2022 | The Netherlands
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
🆕 FinTech Connect 2022 | Nov 30-Dec 1, 2022 | London, UK
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
Blockchain Expo World 2022 | Dec 21-31, 2022 | Istanbul, Turkey
🆕 Metavsummit | Jan 11-12, 2023 | Dubai, UAE
👩💻The job fair
Uniswap Labs – Director of Product Management - New York
Co:Create – Director of Marketing - Remote
Nefture – Full stack developer - Paris/Remote
Chromaway – Web3 NFT Research Analyst - UK
Infinite Reality – Blockchain engineer - San Francisco
Blockchain From First Principle - Analyst & Content Creator - New York
📚The term of the week
Decentralized Application (dApp) is a digital applications or programs that exist and run on a blockchain or peer-to-peer (P2P) network of computers instead of a single computer. DApps (also called "dApps") are outside the purview and control of a single authority. It can be developed for a variety of purposes including gaming, finance, and social media.
📎 Miscellaneous Resources
The Story of Sam Bankman-Fried’s Backroom Deal With Binance’s CZ
Robinhood Plunges as Bankman-Fried’s FTX Sells Itself to Binance
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.