Now it is time to build, collaborate, and enable Web3 projects to thrive.
23 June 2022
Hello there and welcome to the Blockchain From First Principle fortnightly newsletter where I curate some of the week's news, summarise reports, podcasts, and 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 13 leading news you should be aware of
🔦Company spotlight: Celsius Network
💸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
💡The hottest idea/trend in the industry
📅Blockchain, Crypto and Web3 events calendar…
📎Miscellaneous resources
🗞️ The 13 news you should be aware of
1. Euro Coin: a euro stablecoin backed by full reserves
Euro Coin (EUROC) is Circle.com newest stablecoin that will launch on June 30 under the same full-reserve model as USD Coin (USDC), a trusted dollar digital currency with more than $54 billion in circulation. Designed for stability, Euro Coin is 100% backed by euros held in euro-denominated banking accounts so that it’s always redeemable 1:1 for euros.
2. DeFi Protocol Solend passes governance vote to reverse ‘Emergency Powers’
Lending protocol based on Solana Solend has passed a governance proposal to overturn the controversial emergency power proposal, which would have led in an account takeover. The Solend team is currently developing a new solution to address the anonymous wallet. Deposits in the wallet account for 95 percent of Solend's total SOL pool and 88 percent of USDC borrowing. It poses a risk to Solend and prevents ordinary users from withdrawing USDC. If SOL reaches $22.30, the protocol will immediately sell 20% of the wallet's collateral.
3. Mastercard brings its payments network to Web3 and NFTs
On June 9, Mastercard announced they were working to enable NFT commerce with Immutable X, Candy Digital, The Sandbox, Mintable, Spring, Nifty Gateway, and Web3 infrastructure provider MoonPay to make crypto more accessible and help the NFT ecosystem keep growing, innovating and bringing in more fans.
4. Tether to launch stablecoin pegged to British Pound Sterling
Tether plans to release a stablecoin pegged to the British pound in July. The company now offers stablecoins pegged to the US dollar, euro, Chinese yuan, and the Mexican peso. Tether is working with UK regulators to create GBPT. The UK government hopes that the UK will become a global hub for crypto technology and investments.
Despite the plummet in token prices, more than 15,000 people descended on New York City this week to attend NFT.NYC, the largest annual NFT conference that also included the second annual NFT Awards. Winners were determined by analyzing volume data and transactions on OpenSea, which sponsored the event with the APENFT marketplace and NFT.Kred.
6. eBay acquires NFT marketplace KnownOrigin
On June 22, eBay announced the acquisition of KnownOrigin, a UK-based NFT marketplace, for an unknown price. In February of this year, the UK-based business raised $3.5 million. The move comes on the heels of eBay's recent debut into the NFT industry, when the site introduced its sports-themed "Genesis" collection in May.
7. Shopify adds NFT-Gated option for online retailers
Shopify has introduced NFT-gated storefronts, which allow store owners to make their stores more exclusive. It will enable stores to restrict access to people who have certain tokens or NFTs. The feature will be available at physical stores. As NFTs are increasingly used as keys to access rewards, the future of web3 commerce will be about exclusivity.
8. Shell, Accenture, Amex in blockchain project for sustainable air fuel
Shell announced it has partnered with Accenture and American Express Global Business Travel in a pilot blockchain initiative Avelia to promote the use of sustainable aviation fuel (SAF). SAF is made from renewable sources such as plant or animal material, used cooking oil and waste. It can potentially be up to 80% less polluting than conventional air fuels in terms of C02 emissions.
9. Meta partners with Balenciaga, Prada, and Thom Browne and launches a digital fashion marketplace
“Fashion is ultimately a form of art and self-expression. And now being able to wear Balenciaga, Prada, and Thom Browne, I can’t wait to see what comes from this” said Eva Chen, Instagram’s director of fashion partnerships at Meta. The fashion brands such as Tag Heuer, Lacoste and Dolce and Gabban have increasingly been experimenting in the Web3 and crypto space recently.
10. Anchorage Digital announced the industry's first custody exchange network
Anchorage Digital announced the industry's first custody exchange network that gives institutions direct access to most trading pairs across prominent exchanges. The launch of the partnership includes its first full integration with Binance.US and commitments from CoinList, Blockchain.com, Strix Leviathan, and Wintermute.
11. Citi partners with METACO to develop institutional digital asset custody capabilities
On June 22, Citi announced that it has selected METACO to develop a platform to enable clients to store and settle digital assets seamlessly and securely. Okan Pekin, Global Head of Securities Services at Citi, said that Citi is developing new capabilities to support digital asset classes that are becoming increasingly relevant to its clients.
12. Nansen Connect: the messaging app of Web3
Nansen Connect is a messaging app from crypto analytics platform Nansen that lets users log in with a crypto wallet and connect to groups based on their crypto holdings and NFTs. The service will use on-chain data to allow connected users to see each others' portfolios, including project treasuries. This will allow users to monitor accounts in real-time and members may gain more status by being proven, holders. Nansen Connect will help mitigate some of the security flaws seen across the crypto ecosystem through on-chain verification. The service will start with a limited base of users and will gradually onboard more communities.
13. Crypto regulation: Lagarde proposes EU MiCA 2
While the European Parliament has passed the MiCA legislation, it is still going through the EU’s trilogue process between Parliament, the European Council and the European Commission. “To my understanding (MiCA) will not be implemented until 2024, which is a long way away when you think of the speed at which market values and the creativity and greed actually impact those developments,” said Lagarde.
MiCA 2 should:
address the risks of interconnectedness with traditional financial institutions
regulate cryptocurrency staking and lending
address the regulation of decentralized finance where there are no intermediaries
regulate the issuance of crypto-assets where there is no identifiable issuer such as Bitcoin.
“Bitcoins will not be covered by MiCA 1, but hopefully (for) MiCA 2, you will take that into account,” said Lagarde.
🔦Company spotlight
The company: 👉 Celsius Network 👈 is a blockchain-based lending platform that is accessible through a free mobile app. Celsius Network operates on a community-first mandate, giving 80% of its revenue back to its users in the form of additional earnings on saving and borrowing. As of May 17, Celsius claimed that it had 1.7 million users and assets under management (AUM) of $11.7 billion.
The story: Founded in 2017 by Alex Mashinksky and Daniel Leon, Celsius succeeded at raising $50m from its ICO in March 2018 and experienced considerable growth in 2020. In October 2021, it closed a Series B funding round of $750m which valued the company at $3.5 billion.
Why in the spotlight: Celsius had locked $450m of customer funds into Lido’s Staked Ether (stETH) and as stETH's price dropped compared to ETH (stETH will be redeemable 1:1 for ETH only after the Merge) a wave of redemptions and a liquidity crisis sparkled. On June 12, Celsius announced that it was suspending all withdrawals on its lending platform, citing “extreme market conditions”. Celsius’ native token, CEL, went into free-fall undermining confidence in the entire cryptocurrency market. Celsius is now looking for possible financing options from investors and exploring other strategic alternatives, including a financial restructuring.
💸 The development of a startup ecosystem and major PE/VC funding
1. FalconX valuation doubles to $8B despite crypto market turmoil
Crypto platform FalconX has raised $150 million in a Series D funding round. The investment will allow the California-based company to further accelerate growth by looking at merger and acquisition opportunities that add strategic value to its existing core offerings. GIC and B Capital Group led FalconX’s latest fundraising round along with Thoma Bravo, Wellington Management, Adams Street and Tiger Global Management.
2. Magic Eden raises $130M hitting unicorn status at $1.6B valuation
Magic Eden, an NFT marketplace, has secured $130 million in a Series B financing, raising its worth to $1.6 billion. The cash will be used to develop the company's primary and secondary markets, investigate multi-chain potential, and improve its products. Magic Eden controls about 97 percent of the market for daily Solana NFT transactions. Every day, the platform generates around 50,000 Solana-based NFTs.
3. Afropolitan raises $2.1M to bring Web3 to the African Diaspora
Participants in the raise include #Hashed, Cultur3 Capital, and ex-Coinbase CTO Balaji Srinivasan, who in 2021 wrote what would become the basis for Afropolitan's plans for a digital nation. Eche Emole, one of the founders, says Afropolitan gives a chance for black people to come together and decide what type of nation they want, calling Afropolitan "the greatest experiment, even in the Web3 space."
4. Ethereum Layer-2 Immutable X plots $500M fund for NFT and game developers
Immutable, the firm behind the Immutable X layer-2 scaling solution for Ethereum that is used by firms like GameStop, TikTok, and ESL for NFT collectibles and crypto-powered video games, launched a $500 million fund to boost developer adoption of the platform.
5. True Global Ventures doubles down on Web3 with $146M ‘follow-on’ fund
Venture capital firm True Global Ventures 4 Plus (TGV4 Plus) has announced the closure of a $146 million funding round earmarked for a wide range of Web3 projects — highlighting investors’ continued interest in crypto despite an ongoing bear market. Dušan Stojanović, one of TGV’s 15 general partners, shared his thoughts on investing during the bear market: “It is much easier to see more clearly who the winners are now. This has created a high level of confidence amongst our investors.”
6. Alchemy launches $25M developer grant program to fund web3 project
The WAGBI Grants is created to help developers continue building DeFi protocols, NFT experiences, or any project that helps bring web3 to the world. Each project will be eligible to receive up to $50,000 in credits. Applications are now open and grants will be rolling out early July.
📚 Reports and breakdowns of noteworthy developments, here is the TLDR
Crypto payments are attracting people and companies for their lower payment costs, increased optionality and easier access to the global market. They are expected to grow at a compound annual growth rate of 29.5% to $5.2 billion by 2028.
This report takes a deep dive into how businesses can follow the lead of big-name firms like Microsoft, Gucci, AT&T, PayPal and several others in integrating cryptocurrency acceptance into their operations. It covers topics like centralized exchanges, on and off-ramps, point-of-sale systems and cryptocurrency safe.
Here 7 key takeaways:
More and more companies are willing to accept crypto thanks to low fees, fast transaction speeds and the security it offers.
A wide range of companies from different industries already accept cryptocurrency.
Also whole countries greenlight digital currencies. El Salvador and the Central African Republic have already adopted Bitcoin as a legal tender, and Panama along with Paraguay might do so as well in the near future.
Most companies employ a gateway to process cryptocurrency payments such as Circle, TripleA, Alchemy Pay, ForumPay and BitPay.
Businesses that accept digital currencies for payments can either convert their profits into fiat straight away and avoid the inherent volatility of cryptocurrencies or stake their coins using decentralized finance protocols and potentially benefit from the high yields they offer.
Adoption of cryptocurrency payments is spurred by consumer demand: Crypto.com reported in late 2021 that approximately 75% of its clients would have paid in crypto for goods and services had such an option been available.
Merchants that keep some of their funds in crypto should be aware that they might be subject to capital gains tax.
The future monetary system (i.e. BIS 2022 Annual Economic Report)
On June 21, the Bank for International Settlements (BIS) set out a blueprint for a future digital monetary system. In a special chapter of its Annual Economic Report 2022, the BIS said a system grounded in a digital representation of central bank money could combine innovation with essential attributes such as safety, stability, accountability, openness and efficiency.
New capabilities such as programmability, composability and tokenisation are not the preserve of crypto, but can instead be built on top of central bank digital currencies (CBDCs), fast payment systems and associated data architectures.
In both the design of new infrastructures and in regulation, there is an ongoing need for global cooperation between central banks, and indeed a wide range of new stakeholders. Supporting this cooperation will remain a key goal of the BIS.
Peter Yang, a product lead at Reddit and founder of Odyssey, believes that NFT memberships will become a creator monetization channel that rivals ads and subscriptions. With this guide, he wants to help creators to understand how NFTs are used in practice, how they can replace and complement traditional subscription and ad-based revenue models, and how creator economy and web3 startups can capitalize on their growing popularity.
Peters finally suggests that successful communities generally have three components:
The creator already has an engaged fan base to invite to buy their NFTs.
Fans buy NFTs to join the community and help add to the value of membership.
The creator and their community provide utility for the membership in the form of real-world benefits.
To the Boonji, VeeFriends and Moonbirds collectors, do you agree?
Chainalysis released a report saying that Bitcoin’s decline was more closely connected to the slump in tech stocks rather than the UST / Terra crash. Bitcoin’s correlation with tech stocks is a relatively new development.
📈 Charts of the week
According to the chart and table below, Uniswap has outperformed even its home network, Ethereum, multiple times since June 20th. In fact, the decentralised exchange (DEX) has risen to the top of the CryptoFees rankings. As Ethereum is the main base layer for DeFi and other smart contract-enabled activity, it's notable when a protocol outperforms Ethereum in terms of fee generation
The chart below displays NFT trade volume during the last three months by category
💡The hottest idea/trend in the industry
What does decentralized, trustless, digital identity look like?
In this podcast, David Hoffman, Bankless Nation founding father, interviews Vitalik Buterin who talks about Soulbound NFTs, and Disco’s Evin McMullen who takes the side of verifiable credentials.
Why are SBTs regarded as Building Blocks for a Web 3 Decentralized Society (DeSoc) and why are these so unique that this concept is viewed as the next big thing in Web 3?
📅 Blockchain, Crypto and Web3 events calendar…
…for the next couple of months
Vibrant | Jun 24-25 | Rosario, Argentina
European Blockchain Convention 2022 | Jun 26-28, 2022 | Barcelona, Spain
Blockchain in Singapore | Jul 4-5, 2022 | Singapore, Singapore
World Blockchain Summit Poland | Jul 4-4, 2022 | Warszawa, Poland
Paris Blockchain Summit | Jul 8, 2022 | Paris, France
Blockchain and Internet of Things | Jul 8-10, 2022 | Tokyo, Japan
International Congress on Blockchain | Jul 13-15, 2022 | L’Aquila, Italy & Online
Blockchain & Liberty for All | Jul 14, 2022 | Online
World Blockchain Summit Singapore | Jul 14-15, 2022 | Singapore, Singapore
Ethereum Community Conference 5 | Jul 19-21, 2022 | Paris, France
CROSSTECH MEXICO | Jul 21-22, 2022 | Ciudad de México, Mexico
Blockchain Economy Conference | Jul 21-22, 2022 | Istanbul, Turkey
NFT South | Jul 28-30, 2022 | Dallas, Texas
Sustainable Energy: Blockchain and Cryptocurrency | Aug 1-3, 2022 | Online
ETHToronto | Aug 8-10, 2022 | Toronto, Canada
Blockchain Futurist Conference 2022 | Aug 9-10, 2022 | Toronto, Canada
Fintech Fest 1.0 | Aug 10, 2022 | San Diego, California
Play-2-Earn Expo | Aug 10-13, 2022 | Bangkok, Thailand
Superverse | Aug 20-21, 2022 | Mexico City, Mexico
Coinfest Asia | Aug 25-26, 2022 | Bali, Indonesia
📎 Miscellaneous Resources
The opinions are my own. The content of this newsletter is not intended to serve as financial advice and is for general informational and educational purposes only. I do not warrant, endorse, or assume responsibility for the accuracy of any information offered by third-party websites linked above.