Silvergate, Signature, Silicon Valley Bank & Circle; Fidelity Crypto live; Goerli Shapella updates; Binance $1B BUSD; Tilia & JP Morgan; Microsoft & Ankr; Gensler & POS tokens; $25M NFT art fund.
16 March 2023
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Table of Content
🗞️The 15 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 term of the week
📎Miscellaneous resources
Important highlight for this week
When Circle, the issuer of USDC, announced that they had $3.3B in deposits (roughly 8% of their backing at the time) at Silicon Valley Bank, it sent shockwaves through the crypto ecosystem.
This announcement sparked panic among USDC holders, who saw their currency fall significantly as they feared a run on the stablecoin if Circle was unable to make good on its SVB deposits. During the weekend, USDC reached a low of 0.8. We've included reports/articles TLDRs to help you understand what happened and how it was affected by the bank deposit collapse. Does the banking industry really need “Social Media Risk” strategies to overcome bank runs in the new internet-age system of money movement? Find out more in the Miscellaneous section below.
🗞️ The 15 news you should be aware of
1. Fidelity Crypto quietly went live, giving millions of retail customers access to bitcoin, ether
Fidelity Crypto finally is open to the public, giving millions of users access to bitcoin and ether investments. The firm’s retail product was previously available to users only via a waitlist. All waitlist users now have access. Bitcoin and ether transactions on the app are commission free. Fidelity Digital Assets will collect a spread of no more than 1%.
2. Goerli Shapella Announcement
The Shapella network upgrade is scheduled to activate on the Goerli network on March 14, enabling validators to withdraw their stake from the Beacon Chain back to the execution layer. This is expected to be the last testnet upgrade before scheduling Shapella for the Ethereum mainnet.
3. India, UAE in cross-border CBDC trials
The Reserve Bank of India (RBI) and the Central Bank of the UAE announced a collaboration for central bank digital currency (CBDC) experiments. They plan to conduct proofs of concepts and pilots for cross-borde transactions, targeting remittances and trade.
4. Biggest USDC burn on record just occurred, net redemptions since Friday reach $4.5 billion
USDC redemptions reached $6.2 billion since Friday. In the same period, around $1.7 billion was minted, taking net redemptions to $4.5 billion. The single largest redemption ever, of $723 million, just occurred.
5. Binance will convert $1B worth of BUSD Stablecoin to Bitcoin, Ether, BNB and Other Tokens
Binance has announced it will convert $1 billion worth of BUSD into Bitcoin, Ether, BNB, and other tokens in a bid to support the market during turbulent times, which was likely a big driver for BTC, ETH, and BNB’s significant gains yesterday. The source of these funds is the Industry Recovery Initiative fund that Binance and industry partners formed back in November. This comes after the shutdowns and failures of Signature Bank, Silvergate, and Silicon Valley Bank, causing extreme market volatility and uncertainty.
6. Uniswap officially expands exchange services to BNB Chain
The largest decentralized exchange Uniswap was officially released on the BNB Chain network. The deployment follows a successful governance proposal in February and contentious deliberations over a bridge solution.
7. Banks could lose to stablecoins if don’t match corporate demand for DLT, blockchain payments
Late last year, research involving 830 large corporates found that corporate treasurers and CFOs want to use blockchain, particularly for supply chain, trade finance and cross-border payments. However, the corporate view is that banks are not keeping up.
8. Microsoft-backed Space and time partners with South Korean gaming firm Wemade
The Web3 data warehousing platform Space and Time has secured a strategic partnership with South Korean gaming firm Wemade. The publicly listed gaming firm will leverage Space and Time’s suite of developer tools.
9. Banking crisis in U.S. likely to push crypto firms offshore
Sygnum in Switzerland and Bank Frick in Lichtenstein told CoinDesk they have seen an increase in requests to open accounts in the past few days from various jurisdictions - including the U.S. Regardless of where U.S. crypto companies look for their banking partners, regulatory risk in their home jurisdiction will likely loom large.
10. Microsoft and Ankr partner to offer blockchain node infrastructure service
Microsoft partnered with web3 infrastructure provider Ankr to offer a node service for enterprises in need of blockchain data access. The two firms will work together on a new node hosting service in Microsoft's Azure cloud marketplace, with tailored memory and bandwidth specifications for blockchain nodes.
11. Blockchain startup Tari Labs wins restraining order against Lightning Labs over Taro protocol.
Blockchain startup Tari Labs has won a temporary restraining order against bitcoin developer Lightning Labs over its Taro protocol and platform. The ruling means that Lightning Labs won’t be able to make updates to the Taro protocol or announce further developments to the protocol.
12. DeFi protocol Tender.fi hacker returns $1.6M following pricing Oracle Glitch
A white hat hacker who targeted decentralized-finance (DeFi) platform Tender.fi has returned $1.6 million that was stolen on Tuesday, receiving a 62.15 ETH bug bounty worth $850,000 instead. Stark net governance to begin with vote for new protocol upgrade
13. Crypto startups seek new banks as Silvergate, SVB and Signature close doors
Three key crypto banking partners have experienced bank runs and shuttered within the last two weeks. Startups and venture investors share where founders can find refuge as crypto banks face “decapitation.”
14. Cosmos Hub releases Replicated Security to draw closer to rest of ecosystem
Cosmos Hub released Replicated Security, allowing other chains in the Cosmos ecosystem to lean on its network security. The Cosmos ecosystem is full of applications that have their own blockchains, leading to a lot of smaller chains that find it expensive or difficult to maintain security.
15. Crypto VC Firm Pantera Used Silicon Valley Bank as a Custodian
Crypto-focused venture capital and investment giant Pantera Capital recently had assets with the now-shuttered Silicon Valley Bank (SVB), according to a regulatory filing last month.
💸 PE/VC funding
1. Ark raises $16.3M for new crypto fund amid a buying spree
Ark Invest has raised $16.3 million for a crypto fund split across versions in the U.S. and the Cayman Islands. Filings were released days after Ark added roughly $30 million in Coinbase shares to its funds over the last month, and roughly $20 million in Block shares in the last week.
2. Stablecoin issuer CNHC raises $10M in funding led by KuCoin Ventures
Stablecoin issuer CNHC raised $10 million in Series A+ funding. KuCoin Ventures led the funding, with Circle Ventures and IDG Capital participating.
3. A16z Crypto Startup School invests in crypto wallet infrastructure Capsule
Andreessen Horowitz (via its accelerator Crypto Startup School) and Geometry co-led the funding, Capsule said Tuesday, without disclosing the raised amount.
4. Digital fashion firm DressX raises $15M in Series A funding
The round was led by Berlin-based crypto venture capital firm Greenfield. The round, which closed at the end of February, also featured participation from Slow Ventures, The Artemis Fund, Red Dao and Warner Music.
5. Blockchain infrastructure developer Smooth raises $2M in seed funding
Smooth Labs raised $2 million in seed funding led by NGC Ventures. Smooth is building blockchain infrastructure focused on the parallel execution of transactions.
6. Crypto infrastructure provider Orbs raising $10M from DWF Labs in token round
Smooth Labs raised $2 million in seed funding led by NGC Ventures. Smooth is building blockchain infrastructure focused on the parallel execution of transactions.
7. DeFiance Capital completes first close of $100M liquid token fund
Arthur Cheong’s DeFiance Capital completed the first close of a $100 million liquid token fund, sources told The Block. The fund has raised “eight figures” and began investing this month.
8. Framework and Bitkraft lead $6M seed funding into gaming studio Jungle
Bitkraft and Framework Ventures co-led a $6 million seed funding round into Jungle, a Brazil-based web3 gaming studio. Delphi Digital, Karatage, Fourth Revolution Capital, Monoceros, 32bit Ventures, Stateless Ventures, Snackclub and Norte Ventures also took part in the round, which closed at the tail end of last year.
9. This NFT Marketplace Raised $4.7M From OpenSea and Others—Now It’s Shutting Down
Amid a turbulent NFT market, Solana art platform Formfunction is closing down just one year after raising seed funding.
10. Crypto projects raise $50M in funding in the last 24 hours
Several crypto projects globally raise millions in funding amid a renewed negative sentiment towards the digital asset industry. Stablecoins take center stage in the recent developments. Celebrities like Gwyneth Paltrow continue to shower crypto with support.
11. Entre raises $1.6M seed funding round to build a professional network for the future of work
Entre, a professional networking platform providing a community-focused superior alternative to existing professional networking apps, announces the closing of its $1.6 million seed funding round. The $1.6 million seed round was led by Octane Fund, and included participation from Service Provider Capital, CreatorLed Ventures, Kube VC, Umami Capital, Dharmesh Shah (CTO of Hubspot), and other angel investors.
12. Dubai Crypto Venture Capital boosts startups and VCs
Opus Tower hosted the updated version of Dubai Crypto Thursdays Dubai Crypto Venture Capital (DCVC). The selective event opened the door to 50+ VCs, 100+ investors, 120+ Crypto Executives and 12+ startups.
13. Adept, a startup training AI to use existing software and APIs, raises $350M
Adept, a startup building AI that "enables humans and computers to work together creatively to solve problems," yesterday announced that it raised $350 million in a Series B funding round co-led by General Catalyst and Spark Capital with participation from Addition, Greylock, Atlassian Ventures, Microsoft, Nvidia, Workday Ventures, Caterina Fake, Frontiers Capital, PSP Growth, SV Angel and A.Capital.
14. Lionel Messi backs Web3 soccer game startup Matchday in $21M round
The studio is working with FIFA and plans to build Web3 games with the support of pro soccer superstar Lionel Messi's VC firm Play Time.
15. 3AC-affiliated Crypto firm raises $100M for new liquid token fund
DeFiance Capital has reportedly raised $100 million for its liquid token fund. The Block reported that the crypto investment firm completed the first close of the new fund, citing "two sources with direct knowledge of the matter".
16. Stablecoin issuer ECSA secures $3M in funding
Brazilian-based stablecoin issuer ECSA closed a $3 million pre-seed funding round. Y Combinator and Arca participated in the round.
17. Polychain Capital leads web3 dev tool provider Cubist's $7M raise
Web3 developer tools provider Cubist has secured $7 million in a seed round led by Polychain Capital. Dao5, Polygon, Amplify Partners and Axelar also participated in the raise.
18. Proven secured $15.8M in a seed round led by Framework Ventures
Proven, a developer of zero-knowledge (ZK) proofs that helps exchange and asset management clients prove their solvency, will use the proceeds of the capital raise to expand its team and scale its infrastructure. Additional investors in the round included Balaji Srinivasan, Roger Chen and Ada Yeo.
19. Coinbase Ventures joins $15M bet on new crypto exchange Mauve
Violet, a compliance startup focused on decentralized finance, raised $15 million from investors including Brevan Howard and Coinbase Ventures to launch a new, “anti-FTX” decentralized crypto exchange.
20. US digital asset fund, venture capital firm to raise $100M for two new blockchain funds
Alpha Sigma Capital, a U.S.-based digital asset fund, and Transform Ventures, a venture capital firm, will raise $100 million for two new funds focused on the blockchain and so-called decentralized Web 3.0 ventures, Alpha Sigma founder and Chief Executive Officer Enzo Villani said on Wednesday.
⚖️ Policies and laws
1. SEC advances new cybersecurity, consumer privacy rule proposals
The SEC voted on Wednesday morning to propose rules and changes that would bolster information consumers receive about data breaches and heightened cybersecurity disclosures. An SEC official said that those two proposals wouldn’t necessarily be a carve-in or carve-out of crypto.
2. UK to add crypto declaration in Tax Forms
U.K. taxpayers will have to separately report crypto assets on their tax forms in a move that is expected to raise an extra 10 million British pounds (US$12 million) per year for the public purse. The government is introducing changes to the Self Assessment tax return forms requiring amounts in respect of crypto assets to be identified separately
3. EU Parliament passes smart contract regulation under Data Act
Smart contract developers may need to design reset possibilities to allow termination or interruption of transactions.This may restrict innovation or make it difficult for smart contracts in the crypto industry to comply, some in the industry worry.
4. Gensler suggests proof-of-stake tokens are securities
Securities and Exchange Commission Chair Gary Gensler suggested Wednesday that tokens using staking protocols could be considered securities under U.S. law. Gensler suggested that the returns token holders see from staking indicate that those tokens are securities and would need to be registered as such under U.S. law
5. Biden includes crypto tax changes in 2024 budget request
The budget request, released on Thursday, includes room for “wash sale rules,” for crypto. This comes two years after President Joe Biden signed into law a wide-sweeping infrastructure bill that included a broker definition for crypto.
📚 Reports, here is the TLDR
REPORT 1 - Silicon Valley Bank failure
Over just a few short days, crypto-focused banks Silvergate Bank and Signature Bank and startup favourite Silicon Valley Bank all collapsed.
In this report, Michael Cembalest at J.P. Morgan, explains why SVB got shut down by regulators and why that happen so quickly.
The liability issue: extreme reliance on institutional/VC funding rather than traditional retail deposits. The first part of the report discusses the unique and risky position of SIVB bank, which had a high level of loans and securities compared to deposits, and relied heavily on institutional/VC funding instead of traditional retail deposits. This left the bank vulnerable to potential capital shortfalls in the event of rising interest rates, deposit outflows, and forced asset sales. Despite this risk profile, the bank only offered a modest premium on deposits compared to its peers.
The asset issue: buying bonds at generational lows in yields, forced asset sales and securities losses. The second part highlights that US banks have seen a significant rise in deposits since Q4 2019, with only a small percentage being lent out due to weak loan demand, and the rest invested in securities or kept as cash. SIVB relied heavily on "hold-to-maturity" treatment for its growing securities portfolio, which makes selling these securities complicated and may result in the need for a capital raise. SIVB was found to be in a unique investment duration position at the end of 2022, despite its funding profile and high percentage of uninsured depositors.
REPORT 2 - The Shrimp Supply Sink: Distribution of Bitcoin Supply
The supply distribution of Bitcoin continues to be a topic of great interest, for analysis of capital flows, and also for observing the behaviors of investor cohorts. In this piece, Glassnode Insights breaks down the BTC supply by wallet size, and explore how coins disperse over time. Here are the key takeaways
This refreshed analysis of supply changes between wallet size cohorts further supports the case that the BTC supply has indeed continued to distribute over time, with relentless distribution by miners being an indicative example.
An increasingly large proportion of supply is held by smaller entities representative of retail holders, with Shrimps (< 1BTC) and Crabs (< 10 BTC) absorbing a remarkable 2.25x more coins than were mined in 2022.
Institutional adoption post-March 2020 is visible on-chain across several wallet cohorts, with balances showing signs of being increasingly market-driven (i.e. swelling/contracting with price). Entities with a balance between 10 and 1k BTC are absorbing coin volumes equivalent to 100% of issued coins in 2022.
Exchange reserves continue to deplete in aggregate, especially following the collapse of FTX. This is a combination of both renewed demand for self-custody, but also the expansion of institutional and collaborative custody solutions, and exchange-traded products like GBTC.
📈 Charts of the week
Web3 Studios forecasts that the digital identity space may generate more than $600B by 2030
CBDC vs Stablecoins - is there really a difference?
The most common web3 security attacks
They can be categorized into four layers: Infrastructure, smart contract language, protocol logic, and ecosystem
💡Metaverse and NFT news, trends, and insights
1. After leaving Ledger, former chief of staff aims to raise $25M fund for NFT art
Jean-Michel Pailhon, the former chief of staff to Ledger CEO Pascal Gauthier, is raising up to $25 million for an NFT art fund that will prioritize “culturally impactful” blockchain art. The fund hopes to court primarily non-crypto native investors with a particular focus on institutions already holding physical art in their offices and looking to gain exposure to blockchain-based NFT artworks.
2. Meta is shedding another 10,000 jobs after cutting NFT support and making noise about AI.
Meta’s workforce ballooned in recent years as the Facebook parent company signalled its ambitions for the metaverse—but recent moves suggest that it is feeling the sting of changing tech trends and rough market conditions. The company today announced another round of layoffs, one day after saying that it was “winding down” support for NFTs
3. Metaverse payment platform Tilia gets strategic investment from J.P. Morgan
The rise of user-generated content (UGC) across gaming worlds, social platforms and beyond means that we need a way for users to pay other users, users to pay creators and creators to pay their collaborators — even if you don’t know the real identity of the person you’re paying.”
4. The Pokémon Company Might Be Preparing to Make Moves in the Metaverse
The Pokemon Company, a corporation in charge of the development of the Pokemon brand, might be preparing to make some moves regarding the franchise and the metaverse. The company has opened a job opportunity that includes experience and knowledge of fields like blockchain, Web3, and the metaverse as a requirement, including connections with investors in these areas.
The NFT space was booming last March when Formfunction—a Solana marketplace focused on one-of-one, single-edition artwork—announced that it had raised nearly $5 million in funding from prominent backers. Just one year later, however, amid changing tides in the NFT world, Formfunction revealed that it’s closing up shop.
6. Uniswap's NFT Platform Shows DeFi's Reluctant Acceptance of Centralization
In November, the most popular decentralized exchange on the planet, Uniswap, launched a non-fungible token (NFT) trading platform. The new marketplace didn’t list NFTs directly but instead scraped the tokens from all over the market.
7. Salesforce Web3 to help brands build trusted and scalable NFT programs
The platform promised to help companies create, manage and deploy non-fungible tokens in a trusted, scalable and sustainable way.
8. VC-Backed NFT Social Platform Metalink Launches Mobile App
Funded by notable Web3 figures Guy Oseary, Gary Vaynerchuk and MoonPay CEO Ivan Soto-Wright, Metalink aims to be the first mobile platform where NFT collectors can talk, track and transact.
9. Amazon, has announced its plans to enter the fast-growing world of NFTs by launching its own NFT marketplace in April this year.
This move is no surprise, given the recent surge in demand for NFTs and their increasing popularity among art collectors, investors, and enthusiasts alike.
10. Sotheby’s Holding Meme-Inspired NFT Auction Featuring Beeple
The auction inspired by the popular subreddit “Oddly Satisfying” will feature works from artists Anyma, Beeple and Luis Ponce.
🔦Company spotlight
The company: 👉 Molecule 👈 is a decentralized biotech protocol, building a web3 marketplace for research-related IP. Their platform and scalable framework for biotech DAOs connects academics and biotech companies with quick and easy funding, while enabling patient, researcher, and investor communities to directly govern and own research-related IP.
The story: Disrupting early-stage bio-pharma can change the world. Ineffective incentive alignment means potentially promising scientific research projects all too often are abandoned for lack of funding before they get off the ground. For new drugs, the gap between foundational research and clinical trials is called "the valley of death." Molecule aims to cross "valley of death" by making markets for funding science and building tools for researchers to manage rights and permissions to their IP and R&D data using cryptography on Ethereum.
Why should I care: Molecule is democratizing biopharma research and development through Molecule, the protocol. They created a hybrid legal-smart contract primitive called an IP-NFT. The IP-NFT protocol brings rights to IP and R&D data on-chain, unifying the legal rights, data access, and economics around research projects into cryptographic tokens on Ethereum.
📅 Blockchain, Crypto, and Web3 events calendar
….for the next couple of months
March 2023
Sustex - Blockchain for Climate | Mar 15-16, 2023 | Dubai, UAE
ETHDubai | Mar 15-16, 2023 | Dubai, UAE
Solana Hacker House | Mar 15-19, 2023 | Ho Chi Minh City, Vietnam
Virtuality Web3 Summit | Mar 16-17, 2023 | Paris, France
Blockchain Africa Conference | Mar 16-17, 2023 | Johannesburg, South Africa
ETH Porto | Mar 16-18, 2023 | Porto, Portugal
5th Blockchain Int’l Scientific Conference | Mar 18, 2023 | Manchester, UK
Crypto Expo Europe | Mar 19-21, 2023 | Bucharest, Romania
NFT LA | Mar 20-23, 2023 | Los Angeles, USA
FOMO Asia Genesis Conference | Mar 20-23, 2023 | Hong Kong
Paris Blockchain Week 2023 | Mar 20-24, 2023 | Paris, France
DC Blockchain Summit | Mar 21, 2023 | Washington, DC
Art Basel | Mar 23-25, 2023 | Hong Kong
Nigeria Bitcoin Conference | Mar 24-25, 2023 | Lagos, Nigeria
American Metaverse Summit | Mar 29-30, 2023 | Miami, FL, USA
WOW Summit Hong Kong 2023 | Mar 29-30, 2023 | Hong Kong
Crypto Assets Conference 2023 | Mar 29-30, 2023 | Frankfurt, Germany
Miami NFT Week | Mar 30-Apr 2, 2023 | Miami, FL, USA
April 2023
Pantera Blockchain Summit | Apr 3-4, 2023 | San Francisco, CA, USA
NFT.NYC 2023 | Apr 12-14, 2023 | New York, USA
DAO Tokyo | Apr 13, 2023 | Tokyo, Japan
ETHGlobal Tokyo | Apr 14-16, 2023 | Tokyo, Japan
EthereumZuri.ch | Apr 14-16, 2023 | Zurich, Switzerland
Bitcoin Alive 2023 | Apr 15, 2023 | Sydney, Australia
HYFI Conference 2023 | Apr 20, 2023 | Ho Chi Minh, Vietnam
Sol.Ladies Build Hacker House | Apr 20-24, 2023 | Austin, TX, USA
Consensus 2023 | Apr 26-28, 2023 | Austin, TX, USA
Bitcoin Day Omaha | Apr 29, 2023 | Omaha, NE, USA
May 2023
Avalanche Summit 2023 | May 3-5, 2023 | Barcelona, Spain
MoneroTopia 2023 | May 5-7, 2023 | Mexico City, Mexico
Blockchain Economy Istanbul Summit | May 8-11, 2023 | İstanbul, Turkey
NFT Tallinn | May 8-10, 2023 | Tallinn, Estonia
The Crypto and Digital Assets Summit | May 9-10, 2023 | London, UK
🆕 CryptoVSummit | May 10, 2023 | Dubai, UAE
🆕 Solana Taipei Hacker House | May 10-14, 2023 | Taipei City, Taiwan
🆕 Crypto-Energy Summit | May 11, 2023 | Pittsburgh, PA, USA
👩💻The job fair
OpenZeppelin : Head of Product, Remote
Node Guardians : Web3 Senior UI Designer
Aldrin Labs : Head of Engineering, U.K
Zilliqa : Market Research Data Analyst, Europe
Vanterra Ventures : 2023 MBA Associate Program, New York
Touchdown Ventures : Venture Capital Associate, Philadelphia
📚The term of the week
State Channel: Off-Chain transactions made by Blockchain users. The transaction is initiated in the Blockchain, then the State Channel is opened and the transaction occurs Off-Chain, at which point the State Channel is closed and the transaction is submitted to the Blockchain. This is presented as a solution to Blockchain Scalability issues, because it reduces the number of transactions that need to be conducted OnChain.
📎 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.