Genesis troubles; SBF letter; DBS & Onyx Repo; J.P. Morgan Wallet; Komainu Dubai license; HSBC & Wells Fargo DLT FX; Cardano Midnight; Matter Labs $200M; Fidelity Bitcoin; Enterprise DLT use cases.
23 November 2022
Happy Thanksgiving! and welcome to the Blockchain From First Principle newsletter where we curate some of the week's news, summarize 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 16 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 16 news you should be aware of
1. Genesis balance sheet reveals web of loans across Silbert’s empire
Genesis Global has $2.8 billion in outstanding loans on its balance sheet. Around 30% of its lending was made to related parties, including its parent company, Digital Currency Group. DCG's only debt, besides the intercompany loans and a $1.1 billion promissory note, is a $350 million credit facility from a small group of lenders. The company is on track to see $800 million in revenue this year.
2. Genesis, the troubled cryptolender, hires a restructuring adviser
Genesis has hired investment bank Moelis & Company to explore options, including a potential bankruptcy. No final decision has been made yet and it is still possible for the company to avert a bankruptcy filing. There is an issue of liquidity and duration mismatch in the Genesis loan book. The issue doesn't impact Genesis' spot and derivatives trading or custody businesses.
3. Curve releases whitepaper for crvUSD stablecoin
Curve has released a whitepaper detailing its forthcoming stablecoin, crvUSD. The release of the whitepaper saw Curve's CRV token jump by 15% over the next 24 hours. crvUSD will use a novel lending-liquidating AMM algorithm to protect borrowers whose collateral drop below the liquidation price. It will convert tokens to USD as the price of the collateral drops and convert dollars to tokens if it rises.
4. Bankman-Fried explains why FTX collapsed in new letter to employees
"I never intended this to happen”, Bankman-Fried said in the letter sent Tuesday to his former colleagues. Despite the bankruptcy proceedings, Bankman-Fried still reckons there is a chance to save FTX.
5. DBS executes intraday repo transaction on JP Morgan’s Onyx blockchain
In addition to tokenizing the repo security, the DLT repo solution also uses JPM Coin, its blockchain-based bank account, to enable instant settlement. DBS Bank is the first Asian bank to use the repo solution. Other announced participants include Goldman Sachs and BNP Paribas.
6. Nomura-backed digital asset custodian Komainu gets Dubai license
The digital asset custodian Komainu announced it received a minimal viable product (MVP) license from Dubai’s Virtual Assets Regulatory Authority (VARA). This means Komainu can provide institutions in the UAE with digital asset custody and virtual asset management services.
7. JPMorgan Chase registers trademark for cryptocurrency wallet
According to a filing update from the U.S. Patent and Trademark Office (USPTO), JP Morgan’s trademark registration for a crypto wallet was officially approved on November 15.
The survey was conducted prior to the meltdown of Sam Bankman-Fried's FTX and Alameda. The 2022 Digital Assets Outlook Survey shows that 62% of investors who are currently invested in crypto increased their allocations in the past 12 months compared to 12% who decreased allocations.
9. Finastra to integrate post-trade blockchain for derivatives Fragmos Chain
Finastra announced its over-the-counter (OTC) derivatives solution Fusion Summit will integrate with the Fragmos Chain post-trade solution. The integration will be available in Finastra Fusion Fabrice, the company’s app store. Fragmos Chain is expected to go into production early in 2023.
10. Thailand launches national trade blockchain, integrates Japan’s TradeWaltz, Singapore’s NTP
Thailand’s JSCCIB announced the first pilots for its blockchain-based National Digital Trade Platform (NDTP). It also integrated with Japanese blockchain Trade Waltz and Singapore’s single window Networked Trade Platform (NTP). The aim of NDTP is to digitize the trade process to speed up imports and exports and improve access to trade finance for SMEs.
11. Bank of England comments on FTX, has Defi reservations
Sir Jon Cunliffe, Deputy Governor of the Bank of England acknowledged that, some see the alternative to regulation as embracing Decentralized finance (Defi) with code managing risk and removing the dependence on centralized entities. He questioned whether most Defi protocols are decentralized with doubts about their governance.
12. Kroll publishes FTX list of banks, counterparties, relationships
Kroll, appointed claims agent for the FTX/Alameda bankruptcy published a preliminary list of interested parties, including banks, counterparties, and suppliers. The Kroll list of ‘vendors’ includes CoinDesk, which broke the story about Alameda’s FTT token holdings, as well as The Block. However, neither Tether nor Bitfinex is mentioned
13. Cardano is launching a new privacy blockchain and token
Input Output Global (IOG), the firm behind the Cardano blockchain, is releasing a new privacy-focused blockchain called Midnight and a token called dust to accompany the new network.
14. Sequoia Capital apologizes to investors after $150 million FTX loss
Sequoia Capital partners apologized to investors for the $150 million it lost on investments in crypto exchange FTX, n a Tuesday call with investors, Sequoia partners said the firm would improve its due-diligence process on future investments and that it believed it was misled by FTX founder and CEO Sam Bankman-Fried.
15. HSBC, Wells Fargo extend FX DLT settlement to Chinese Yuan
HSBC and Wells Fargo’s new DLT FX settlement solution has now transacted more than $200B between them. They extended this solution to include Chinese Yuan (CNH) bilateral transactions. By using DLT, the companies have shared FX transaction records and full visibility into the transactions, reducing the need for reconciliations.
16. Singapore’s Temasek writes down $275M investment in FTX
Temasek invested $210 million USD in FTX international, giving it a minority stake of about 1%. It also invested $65 million for a minority stake of about 1.5% in FTX US, in two funding rounds from October 2021 to January 2022. The firm said the total cost of its investment was 0.09% of its net portfolio value of $403 billion SGD (about $293 billion USD).
💸 PE/VC funding
1. Cosmos-based DeFi protocol Onomy raises $10M
Onomy Protocol has raised $10 million from Bitfinex, GSR, Ava Labs and others. The protocol aims to converge DeFi and forex markets through its products including a DEX and a wallet.
French NFT Utility Platform Tropee Raises €5M in Seed Round Led by Tioga Capital. The new funding will be used to further develop the platform and expand Tropee’s team.
3. DEFYCA raises $1.3M in Seed Funding
DEFYCA, a Luxembourg-based provider of a digital securities platform, raised $1.3M in Seed funding. The round was led by QBN Capital and Blizzard Fund.The company intends to use the funds to launch its protocol and take the product to market.
4. Vezgo raises $750K in Pre-Seed
Based in Ontario, Canada, Vezgo completed its spin-off from Wealthica and now operates as a wholly independent entity. The funding came from Bitnomic Capital Inc., Flinks Technologies Inc., M2S Capital Inc., and Chouinard Family Office in addition to angel investors and serial entrepreneurs Andrew Izyumov (ex-Goldman Sachs) and Rachid Ajaja.
5. Rekt Studios raises $1.5M for its blockchain technology
Rekt Studios, a Dubai-based startup specialized in leveraging blockchain and emerging technologies has raised $1.5m in funding to bolster the development of the ‘Unseen’ ecosystem. The funding came from Cypher Capital, a Dubai-based leading blockchain and web3 venture capital firm.
6. VCs poured $41B into crypto in the past 18 months. Is there any hope for a profit?
VCs invested more than $25 billion in blockchain companies in 2021, and then a further $16 billion in the first six months of 2022, according to data from CB Insights. Andreessen Horowitz closed a $4.5 billion crypto fund, its fourth, and former a16z partner Kathryn Haun raised $1.5 billion for her new firm’s maiden fund. Coinbase Ventures, Sequoia Capital, and Chase Coleman’s Tiger Global are also among the many VCs committed to deploying hundreds of millions of dollars to crypto start-ups in the near future.
7. Matter Labs nets $200M to build zkSync Ethereum scaling platform
Matter Labs’ Series C funding round, which closed before the market was roiled by the collapse of crypto exchange FTX, was co-led by Blockchain Capital and Dragonfly, and was joined by venture capital heavyweights including Variant, Lightspeed Venture Partners, and Andreessen Horowitz.
⚖️ Policies and laws
1. IMF: the African crypto market needs regulation as it keeps growing
IMF in its blog post concluded, Despite the various bans implemented, the public’s interest in cryptocurrencies has remained high. Due to the FTX implosion and the volatility that it has caused, proper regulation is now more important than ever. They also noted that only around a fourth of African countries have a regulatory framework for such assets.
2. RBI in final stages of retail CBDC pilot rollout
The Reserve Bank of India (RBI) is in the final stages of the rollout of the retail central bank-backed digital currency (CBDC) that will be interoperable with the present forms of payment systems. Officials indicated that the platform for CBDC is being hosted by the National Payments Corporation of India and will be similar to the current UPI platform.
3. New York imposes 2-year moratorium on new Proof of Work Mining after Gov. Hochul signs bill into law
The New York State Senate passed a bill targeting proof-of-work (PoW) mining in June this year in an effort to address some of the environmental concerns about cryptocurrencies. New York's Democratic Gov. Kathy Hochul signed into law a two-year moratorium on proof-of-work (PoW) cryptocurrency mining
4. Binance US steps into national politics with new campaign PAC
As campaign mega-donor Sam Bankman-Fried and his FTX compatriots vanish from U.S. policy circles, their absence left a void in the crypto industry’s political involvement. Binance.US has chosen this moment to step into the arena with its own political action committee (PAC), the Binance.US Innovation PAC
5. Lawmakers urge Fidelity to drop Bitcoin retirement plan after FTX crash
U.S. Senators today sent another letter to investment giant Fidelity Investments, warning it against offering Bitcoin to its customers following the collapse of crypto exchange FTX. Boston-based Fidelity, one of the world’s largest asset managers, is America’s largest provider of 401(k) savings accounts. In April, the firm launched a new product offering access to Bitcoin.
📚 Reports, here is the TLDR
Report 1 - The State of Enterprise Blockchain in 2022
Enterprises use a permissioned blockchain — known as an enterprise blockchain — to speed up business processes, improve transparency, and reduce costs. The private nature of enterprise blockchains makes them preferable to public blockchains, such as Bitcoin, because it restricts data visibility. Enterprises are using blockchain solutions to make their business operations more efficient.
In this report, Team Blockdata covers:
The increased enterprise adoption of blockchain solutions by the top 100 companies based on market cap (as of March 2022)
The most popular trends in the industry
The latest news, updates, and analyses of the most popular enterprise blockchains
Case studies featuring prominent industries and companies
Here are some key findings:
It is anticipated that investments in enterprise blockchain are expected to reach $16B by 2023, at a 5-year compound annual growth rate (CAGR) of 60.2% between 2018-2023, according to a report published by International Data Corporation (IDC).
Of the top 100 public companies, 77 are using blockchain technology.
Hyperledger Fabric is the preferred solution for 38% (vs. 26% in 2021) of the top 100 companies. Ethereum follows with 24% (vs. 18% in 2021), Quorum with 17% (vs. 11% in 2021), R3's Corda with 13%, and PharmaLedger with 8%.
Competitors are collaborating on blockchain projects, which will benefit the industry as a whole.
The overall enterprise blockchain industry appears to be in its infancy. In 2021, more than 800 companies were building their blockchain networks on the DLT platforms analyzed.
The scope for mass blockchain technology adoption for corporate usage is immense. With higher adoption rates and growing trust among market participants, the market will prosper in the coming years.
Report 2 - Top Blockchain Use Cases For Enterprises
Blockchain brings together people from many walks of life, including politicians, businesspeople, coders, gamers, and artists, who are all united in their trust in blockchain and its potential to construct a new way of living in the future.
Decentralization, programmability, and immutability can be applied to various industries, creating a multitude of use cases.
In this report, Rejolut covers the most pertinent blockchain use cases across banking, healthcare, healthcare, retail, agriculture, government, supply-chain management, pharmacy, contraction, gaming, identity management, and carbon credit.
Definitely, an interesting report to read if you are curious about existing commercially viable Blockchain use cases.
📈 Charts of the week
Entities with investment exposure to FTX by The Block Research
The best possible metric to measure the success of L2 systems on Ethereum is the gas consumed on the mainnet to validate transactions and for bridging between the various chains. October 2022 with 9 days to go is already a record. 79.87b gas already consumed.
Visualising FTX’s Balance Sheet Before Bankruptcy
💡Metaverse and NFT news, trends, and insights
1. McKinsey reported more women engagement in metaverse but power concentrated to men
According to the report, women spend more time in the metaverse than men but power is still in the hands of men. 90% of the metaverse projects are funded by men out of the $112B invested.
2. FIFA in metaverse, Messi, and Ronaldo lead World Cup NFT Bonanza
Messi teamed up with Web3 studio Ethernal Labs and its marketplace to develop his second NFT collection. Ronaldo launched an NFT collection on Binance.com with a long-term partnership. FIFA developed its own NFT marketplace on the Algorand blockchain and partnered with many companies to develop various soccer-themed Web3 games.
3. Mattel launches NFT marketplace with Hot Wheels collection
The marketplace is made for mainstream consumers and is built on the Flow blockchain, which also powers the NBA Top Shot platform. It doesn’t require users to have cryptocurrency to make purchases. VP at Mattel Future Labs said that the in-house platform will further allow the translation of iconic Mattel IP (intellectual property) into digital art.
4. Crypto custodian Aegis Trust offers $25M insurance policy for NFTs
The unregulated crypto market and the FTX collapse reconsidered the demand for insurance in digital assets. Lloyd’s will allow Aegis to insure up to $25 million for tokenized assets held by institutional investors, hedge funds, and exchanges.
5. Magic Eden will now support Polygon-based NFT
Currently it supports Solana and Ethereum-based NFTs.The chain is supported by Web3 gaming publishers such as Atari, Decentraland, The Sandbox and more.
6. Will the metaverse’s impact on digital marketing be equivalent to social media?
A new academic paper exploring the metaverse’s role as a tool for digital marketing noted it is a new medium for marketing purposes alongside the web, social media, and other digital marketing channels. And it proposes the dawn of a new marketing era.
🔦Company spotlight
The company: 👉 Doc.ai 👈 is a blockchain-based startup specialized in delivering better health outcomes. It combines blockchain and machine learning for predictive analytics and personal health insights. The doc.ai platform combines all of a patient’s medical data from every single medical source - pharmacies, doctor visits, emergency room stays - under one secure app.
The story: Launched in 2016 in Palo Alto, doc.ai is an artificial intelligence company for a new age of Healthcare. The company was acquired by Sharecare and continues to expand its capabilities in analytics and AI to optimize engagement, and accelerate actionable insights and valuable outcomes in healthcare.
Why should I care: Doc.ai is a leading example of how blockchain has wider applications beyond the field of finance. The app lets patients manage all their medical data, get predictive insights about their risk for illness or disease, and even compensates them for sharing their data for medical research.
📅 Blockchain, Crypto, and Web3 events calendar
….for the next couple of months
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
Blockchain Thailand Genesis 2022 | Nov 26-27, 2022 | Bangkok, Thailand
🆕 Crypto & Digital Assets Summit | Nov 28, 2022 | London, UK
sub0 2022 – The Polkadot Conference | Nov 28-29, 2022 | Lisbon, Portugal
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
Women Web3 Summit 2022 | Nov 30-Dec 1, 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
Puerto Rico Blockchain Week | Dec 5-10, 2022 | Carolina, Puerto Rico
🆕 Berlinverse | Dec 6-7, 2022 | Berlin, Germany
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
Web3 Galaxy | Dec 15-16, 2022 | Dubai, UAE
Blockchain Expo World 2022 | Dec 21-31, 2022 | Istanbul, Turkey
Metavsummit | Jan 11-12, 2023 | Dubai, UAE
CFC St. Moritz | Jan 11-13, 2023 | St. Moritz, Switzerland
World Crypto Conference | Jan 13-15, 2023 | Zürich, Switzerland
🆕 Crypto Summit | Jan 16-20, 2023 | Zürich, Switzerland
🆕 Bitcoin Day Naples | Jan 21, 2023 | Naples, FL, USA
👩💻The job fair
Lemon.Io: Blockchain Developer - Europe/ Remote
XTX Markets: Trading Operations Crypto HFT - London/Hybrid
IOV Labs: Smart contracts Full-stack Engineer - Europe/Remote
📚The term of the week
Immutable. Unable to be changed. Describes one of the perceived benefits of Blockchain that once a Block is written to a Blockchain, it cannot be changed. Rewriting a Blockchain is not impossible, but it involves enormous complexities.
📎 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.