Alameda $5.4B; Goldman crypto investments; Alchemy dApp store; Ledger Stax; ConsenSys & MetaMask; Vanguard DLT AM; Goldman, Santander, UBS repo; Animoca $2B Metaverse; Nike’s RTKFT; DAO & CBDC TLDRs.
8 December 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 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. Revealed: the Alameda venture capital portfolio
A screenshot of an Excel spreadsheet shows an Alameda Research private equity portfolio, mixed with some FTX bets, being offered as collateral. The screenshot was shared when Sam Bankman-Fried was seeking rescue funding in early November. It shows a total investment value of over $5.4 billion. The portfolio offers regulators insight into whether the group's trading and exchange businesses were ever operationally separate as claimed.
2. Goldman Sachs to spend 'Tens of Millions' on discounted crypto investments after FTX implosion
Goldman Sachs is looking to spend tens of millions of dollars on crypto firms. The firm sees an opportunity for trustworthy players in the industry. FTX's bankruptcy has left many companies with lower valuations. Goldman sees these companies now as priced more sensibly.
3. Alchemy releases Web3 App Store to streamline dapp access
Alchemy is rolling out a dApp marketplace to streamline access to decentralized applications for users and developers. It will be centralized but not monetized. The marketplace will provide free access to users and developers. Placing dApps into an organized, accessible marketplace may help onboard new users to web3.
4. Legendary Apple designer lends his touch to new Ledger Stax crypto wallet
Tony Fadell, known for designing Apple's original iPod music player and being a co-creator of the first iPhones, has built a hardware wallet for Ledger. The Ledger Stax features an E-Ink display that covers the front and curves around the spine of the device to let users view their favorite art. It offers the same functionality and security as Ledger's other products. Ledger had its two best-ever sales days after FTX went under.
5. FBI arrests blockchain startup CTO for allegedly stealing over $1 million
The Department of Justice unsealed wire fraud charges against Rikesh Thapa, alleging that he stole money held on his firm's behalf in a personal bank account while also embezzling upwards of 10 BTC from Blockparty's holdings.
6. Former CFTC Commissioner takes up Head of policy at crypto VC giant a16z
Andreessen Horowitz has appointed Brian Quintenz as its new head of policy for crypto. Quintenz previously served as the commissioner of the Commodity Futures Trading Commission under Presidents Obama and Trump.
7. Financial Stability Board discusses Defi, crypto trading platforms
FSB has its plenary meeting in Basel at which one of the topics discussed was crypto assets and the collapse of the crypto exchange. It noted that many of the roles deliberately separated in Trad Fi are merged in some of the DEFI solutions. This needs to be addressed specifically the “concentration of risk” and “Conflict of interest”.
8. ConsenSys intends to store MetaMask user data for only seven days
Blockchain software company ConsenSys clarified that it plans to only store and retain user IP addresses and wallet data for up to seven days. This is an attempt to reassure users that their personal information is being handled securely after it saw a backlash when it first said it was collecting such data.
9. Vanguard adopts new DLT asset management solution
Grow inc. developed a DLT-based back-office solution for asset management. Vanguard Australia adopts this solution which reduces the manual process and straightens the process. It brings and integrates both client funds and customer transactions on a shared ledger thereby reducing the time spent by avoiding any possible manual errors.
10. Nexus Mutual hit with $3M in Ethereum exposure to Orthogonal trading default
The FTX dominoes continue to tumble. The crypto insurance protocol, Nexus Mutual announced that it expects "to take a loss of around 2,461 Ethereum" (roughly $3M) due to Orthogonal Trading defaulting on its loans. The two projects were both borrowing from M11 Credit's Wrapped Ethereum (WETH) lending pool built on Maple Finance.
11. Goldman, Santander, UBS in the trial of blockchain repo settlement with Finality, HQLAᵡ
Blockchain trading platform Fnality and collateral management solution HQLA tested a group of repo transactions with Banco Santander, Goldman, and UBS. The collateral remained on the HQLA and the money on the Fnality. Goldman is also part of the Intraday repo solution run by JP Morgan.
12. Mantle: A new approach to scaling Ethereum
Mantle is a layer 2 blockchain that aims to bring hyperscale to Ethereum by taking a modular chain approach. It leverages a separate decentralized data availability layer and combines it with Ethereum rollups to achieve scale. The approach addresses the security and scalability limitations of current solutions. It will open up new use cases and make it more affordable for users to transact.
13. DekaBank’s SWIAT proposes trigger payments for tokenized securities settlement
SWIAT, A DLT tokenization network founded by the Deka Bank had proposed a trigger solution ‘Cycros” which uses CBDC. However, Euro CBDC is not likely to live soon, hence it provides an alternative solution for the interim. Deka Bank launched the SWIAT Network in 2021. It uses an enterprise version of the Ethereum blockchain
14. Bitcoin mining difficulty drops by most since July 2021 as crypto winter cuts profitability
The data shows, The difficulty of mining a bitcoin block fell by 7.32%, with miners powering off machines as a brutal bear market eats into profit. The mining difficulty automatically adjusts according to the hash rate, or computing power to mine a bitcoin block roughly stable, the more miners are working, the higher the difficulty becomes.
15. Blockchain data provider Chain-link launches staking of its native token LINK
Chainlink, a provider of price feeds and other data to blockchains, introduced staking of its native token LINK to its network to help keep the protocol secure. Chain-link Staking v0.1 allows people to earn rewards while helping the protocol become more secure. To do this, stakers will have to “commit LINK tokens in smart contracts to back certain performance guarantees around oracle services.”
16. Solana-based DEX Orca partners with Stripe for fiat transactions
Orca, a Solana-based decentralized exchange (DEX), has integrated with payments heavyweight Stripe to to power its fiat-to-crypto transactions. Users will now be able to make fiat purchases for tokens such as USDC and SOL via an onramp built inside Orca using Stripe's fiat-to-crypto system.
💸 PE/VC funding
1. Picus defies cooling Web3, crypto markets with a new investment unit
The unit, dubbed Picus.xyz, will target pre-seed to Series A startups, providing both equity investments and tokens. The firm has already begun to back companies in the area with its portfolio companies including Nefta, a Web3 gaming platform, and Arda, a provider of risk management services for digital assets.
2. DeFi derivatives protocol Perennial raises $12M, launches mainnet
Polychain Capital and Variant co-led the round, with Archetype, Coinbase Ventures, Scalar Capital, Robot Ventures and others. Perennial has a packed roadmap planned out, including more tradable markets, an ecosystem buildout on L2s, and more.
3. Stablecoin startup Membrane Finance reels in EU money licence and €2M in seed financing
The Finnish fintech building a European alternative to the USD stablecoin, has been granted an Electronic Money Licence by the country's regulator and picked up €2 million in seed funding from venture capital firm Maki.vc.
4. Bitwave raises $15M for crypto-focused tax and accounting platform
The funding round led by Hack VC and Blockchain Capital. The funding is being used to launch a product called Bitwave Institutional, which adds advanced features on top of its current platform.
5. Uniswap-based DeFi protocol Panoptic raises $4.5M
Panoptic raised $4.5 million to build a decentralized protocol for perpetual options. Investors include Uniswap Labs Ventures, Coinbase Ventures and Jane Street.
6. Ngrave looks to raise $15M Series A at $60 million pre-money valuation
Binance Labs is leading the round, a source with direct knowledge of the matter said. Ngrave declined to comment to The Block about the pitch deck, round and valuation.
7. Stablecoin issuer Circle abandons SPAC stock listing
Circle and Concord Acquisition corporation initially first agreed to merge in July 2021, the transaction timeline was extended to February doubling the valuation to $9B. However, after the collapse of FTX, it made the merger tricky as the valuations of stablecoins issues were impacted. Hence merger is called off.
8. Animoca Brands' vision to invest $2B in mid and late-stage Metaverse
The fund is looking to invest in mid- to late-stage metaverse businesses. Animoca Brands became the largest blockchain investment unit in Asia. Investments include in OpenSea, Dapper Labs, Yield Guild Games, Star Atlas and Axie Infinity developer Sky Mavis. Company is backed by Temasek and True Global Ventures are looking for direct investment hence new capital structure.
9. Keyrock scores $72M in Ripple-backed Series B
Investors who took part in the round included Ripple, SIX FinTech Ventures, and Middlegame Ventures. The new round of funding allows the Brussels-based provider of liquidity services for the cryptocurrency market to accelerate executing its vision to provide liquidity solutions for all digital assets.
10. TON Steward looks to draw projects to its ecosystem with $126M rescue fund
The fund – which is backed DWF Labs, Darley Technologies, Hexa Capital and TONcoin Fund Ecosystem Partners – differs from Binance's $2 billion recovery fund, which will be used to buy distressed assets.
⚖️ Policies and laws
1. Kazakhstan's parliament moves forward on Bitcoin mining legislation
The new legislation would put in new licensing regimes for crypto miners based on whether or not they operate their own facilities or rent them from other suppliers. Miners would also have to purchase their electricity from the shared grid at market rates through energy provider Korem, which follows earlier specific taxes on miner electricity consumption.
2. Paraguay votes down crypto regulatory bill in a blow to crypto mining industry
Paraguay's lower house failed to pass a bill that would have regulated crypto, a big blow to the country's burgeoning mining industry. The relatively inexpensive electricity has attracted local and international firms to set up bitcoin (BTC) mines in the country. The bill would have regulated crypto and mining and was initially passed by the country's Senate in July.
3. Dubai presses for crypto companies to set up shop
Dubai is heavily recruiting crypto companies to establish themselves there, but the 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. The regulator has previously issued some guidelines on marketing and advertising for virtual assets.
4. Crypto taxes could bring in $2.5 billion for the EU, leaked draft suggests
A European Commission proposal for taxing crypto estimates that taxes on crypto assets could raise as much as €2.4 billion ($2.5 billion), a leaked draft obtained by The Block suggests. Crypto service providers in the EU will need to report to national tax authorities. The document indicates that some rules would start applying as early as 2025, with most coming into force in 2026.
5. Canada's Manitoba Province enacts 18-month moratorium on new crypto mining
Canada's Manitoba province has set an 18-month moratorium on new crypto mining operations, citing the possibility of the local grid being overwhelmed by new projects. This is the latest in a series of jurisdictions to pause or slow down the approval of new crypto-mining operations. The existing 37 mining facilities will not be affected.
6. Bank of America says regulation is key for mainstream adoption of crypto
The bank noted that the top 100 crypto tokens have fallen 64% year to date, but pointed out they are still up 2,175% since the end of 2016. The cost of ignoring digital assets is high. The development of blockchains that are smart contract-enabled and applications with real-world use has accelerated this year, the report said.
📚 Reports, here is the TLDR
Report 1 - The State of CBDCs in 2022
With the modernization of global payment systems, central banks are stepping up and pursuing CBDC projects as a modern take on central bank money in the digital economy. In this report, Team Blockdata covers the latest developments in CBDCs in 2022.
CBDCs can be designed to serve either financial intermediaries only, or any person in the wider economy. The former is referred to as wholesale CBDCs and the latter as retail CBDCs.
The use cases of both retail and wholesale CBDCs, and the global debate regarding CBDCs are causing central banks to have their own take on things and the report analyzes how some of the major central banks have approached the issue.
While CBDC pilots and projects have been in process since 2014, recent initiatives also indicate that these efforts are gaining traction. Around 60% of central banks around the world expect to issue a retail CBDC in the next 1 - 6 years. The report covers some of the major pilots and partnerships such as the Reserve Bank of India’s e-rupee, Project mBridge, MIT's Digital Currency Initiative, and Project Jasper.
Irrespective of whether central banks decide to launch CBDCs or not, they are readying the technology required to support them. Several central banks have entered into technology partnerships with leading DLT and blockchain providers like Corda, ConsenSys, The Hyperledger Foundation, and Onyx/Multiple wCBDC.
While giant strides are being made in exploring the implications and use of CBDCs around the world, several key issues need to be resolved before universal adoption:
anonymity and privacy
interoperability
technology
country-specific requirements
design and the central banking policy balance
regulatory framework
Roughly 110 central banks around the world are at various stages of ironing out the creases. A handful have already rolled out CBDCs. Some, like the PBoC and Sweden's Riksbank, are at more advanced stages than others. Despite uncertainties regarding the rolling out of CBDCs, central banks are keeping their monetary systems in a state of preparedness for their widespread use in the future.
Report 2 - Degrees of decentralization in DAOs
What are DAOs? A decentralized autonomous organization (DAO) is a new type of organization that is user-owned and user-governed. DAOs can be grouped into several general categories based on their primary uses, such as Protocol DAOs, Investment and Grant DAOs, Service and Social DAOs, and Media DAOs.
Benefits of Decentralization. DAOs aim to build more cohesive, transparent, equal, and democratic communities by lowering agency costs, empowering users, and enhancing trust through decentralization.
Costs of Decentralization. At the same time, decentralized decision-making also has its costs, including lower levels of expertise, weaker protection of trade secrets and confidential information, and challenges in coordination.
How decentralized are DAOs really? Some complain that DAOs currently are not truly fully decentralized. This is true. Most DAOs are for the most part effectively controlled by large token holders, core developers, or influential individuals in the organization. However, just because DAOs are not fully decentralized does not mean that they are betraying their core principles.
How decentralized should DAOs be? Decentralization happens on a spectrum. It depends on how the technology behind the DAO alters the tradeoff between costs and benefits in specific contexts. Organizers of DAOs thus have to carefully decide which decisions are taken as a group, and which ones are delegated to representative agents, to strike the most appropriate balance for their situation and achieve better outcomes.
📈 Charts of the week
Silvergate performance in Nov 2022
Silvergate underperformed Bitcoin, the S&P 500 and Nasdaq in November. To be seen is whether or not Silvergate's requirements to abide by the USA PATRIOT Act gives the U.S. govt regulatory jurisdiction to pursue FTX / Alameda.
Value locked in Ethereum Scaling solution by type
Crypto Exchange volume chart month on month
💡Metaverse and NFT news, trends, and insights
1. Nike’s RTKFT launches NFT ‘phygital’ sneaker collection, Cryptokicks iRL
Nike-owned blockchain sneaker startup RTFKT Studios announced the launch of Cryptokicks iRL, a sneaker collection that brings to life RTFKT’s vision to merge the digital and physical worlds. Each collector will receive RTFKT’s WM Chip in order to link the digital and physical items.
2. Malta seeks to remove NFTs from Crypto Law
Malta’s Financial Services Authority said Monday it wants to remove service providers for non-fungible tokens (NFTs) from the scope of its 2018 virtual-assets law as it prepares for new European Union crypto legislation. The move anticipates new EU legislation by excluding non-fungible assets.
3. Coinbase Wallet App update disables NFT functionality at Apple’s request
Apple is demanding that Coinbase pay a 30% tax on gas fees used to transfer in-app NFTs. Coinbase Wallet application users are caught in the fray over Apple’s in-app purchase system that takes a 30% cut from app developers who annually make more than $1 million through the App Store. Users can import their recovery phrase into a non-IOS wallet dapp to regain access to NFT transfers. Apple has been sued before for not allowing users and developers to use there own payment platform.
4. Magic Eden introduces a new protocol aimed royalty protection
Magic Eden became latest platform to release a tool allowing creators to enforce royalties on their collections. Additional feature include ability for creators to introduce dynamic royalties. The new Open creation Protocol is built on SPL Library, for creators to protect royalties on new collections.
5. Chinese court says NFTs are virtual property protected by law
The court said NFTs are “unique digital assets” that “belong to the category of virtual property” in a case where it had to confirm the legal attributes of NFTs.
🔦Company spotlight
The company: 👉 Anchorage Digital 👈 is a digital asset platform offering custody, trading, and financing services, as well as staking and governance. It is a leading example of a successful scale-up in the space, with a valuation of over $3 billion and investors including Andreessen Horowitz and GIC, Singapore’s sovereign wealth fund. Its crypto-native digital asset platform offers solutions like modern security engineering for secure crypto custody, trading, staking, and governance, enabling businesses to streamline their investments through blockchain technology.
The story: Anchorage Digital was founded by Diogo Monica and Nathan McCauley in 2017 and headquartered in San Francisco, California. By 2021, The company had raised $80 million in funding from such leading investors as Visa and Andreessen Horowitz and counts as clients of many of crypto’s largest and best-known funds, including Blockchain Capital, BlockTower, Polychain, and Paradigm. Its latest round raised $350M in Q4 2021.
Why should I care: Despite the recent downfalls in crypto Anchorage Digital is continuing its plan of expanding into Asia with five institutional partners, including the Thailand-based crypto exchange Bitkub and the Singapore-based blockchain investment firm FBG Capital. The founders expect Asia to represent up to 25% of Anchorage’s business within the next 18 months, with an emphasis on Singapore. Given crypto conditions, the tone has shifted because of the market, yet anchorage remains strong given its emphasis on audits and increased oversight of the space.
📅 Blockchain, Crypto, and Web3 events calendar
….for the next couple of months
Puerto Rico Blockchain Week | Dec 5-10, 2022 | Carolina, Puerto Rico
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
🆕 Decrypt Davos 2023 | Jan 19, 2023 | Davos, Switzerland
🆕 Sustex - Blockchain for Climate | Jan 19, 2023 | Dubai, UAE
Bitcoin Day Naples | Jan 21, 2023 | Naples, FL, USA
Quantum Miami | Jan 25-27, 2023 | Miami, FL, USA
🆕 European Web3.0 Summit | Feb 7-8, 2023 | Antwerpen, Belgium
👩💻The job fair
Palm Foundation – Motion Graphic Designer - Argentina/Remote
Whatnot – Senior Full stack engineer, NFT - North America/Remote
Whatnot – NFT GTM Manager - North America/Remote
Meta mask – Director of Community - United states
Meta Mask – Backend engineer(On Ramp) - Canada/United States
📚The term of the week
Mining is the activity of choice for people who would rather expend vast resources on solving extremely complex math problems with extremely fancy computers than just buy Bitcoin or any other coin. Mining is the process of putting more Bitcoin into circulation, and it is miners who complete the POW to authenticate transactions on the Blockchain.
A mining pool is a group of people who work together and combine their computing resources to increase the chance of successfully mining a Block. The participants split the reward earned by the pool in relation to the share they contributed to mining the Block
Cloud mining is a mining method whereby miners rent or invest in cloud-based mining capacity to avoid the hassle of maintaining a Mining Rig at home.
A mining contract is an agreement where a user can rent, invest in, or otherwise pay for the output of mining capacity.
📎 Miscellaneous Resources
Here's everything you need to know about risk management in Crypto
What in the Ethereum application ecosystem excites me - Vitalik
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