SWIFT X-border CBDC; Kraken as a bank; Visa B2B Connect; Silvergate troubles; Coinbase Asset Management and WaaS; Uniswap vs. Apple; AXA digital assets; Tether under investigation; NEW PE/VC snapshot!
9 March 2023
Greetings Blockchain From First Principles readers,
This week we are launching a new section that provides a monthly snapshot and trend analysis of the crypto-related PE/VC industry.
We hope the quantitative data and related insights provided by these reports play a positive role in continuing to improve the crypto fund industry's transparency and provide useful metrics for crypto funds and other participants to benchmark their growth, operations, and best practices.
Going forward, you will be receiving the monthly reports separately. Let us know what you think!
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Table of Content
đď¸The 14 news you should be aware of
đ¸PE/VC funding
âď¸Policies and laws
đReports, here is the TLDR
đCharts of the week
đĄMetaverse and NFT news, trends, and insights
đŚCompany spotlight
đ Blockchain, Crypto, and Web3 events calendar
đŠâđťThe job fair
đThe term of the week
đMiscellaneous resources
đď¸ The 14 news you should be aware of
1. SWIFT cross-border CBDC solution to progress to beta
SWIFT has been testing an interoperability solution to enable domestic central bank digital currencies (CBDCs) to be used for cross-border payments. It ran 12 weeks of successful sandbox simulations with the central banks of France, Germany, and Singapore and 15 commercial banks and plans to advance to a beta phase.
2. Kraken is on track to launch bank 'very soon' despite regulatory 'weird place'
Despite a challenging regulatory environment, Kraken is apparently moving ahead with plans to launch its own bank. This launch comes on the heels of Krakenâs settlement with the SEC over its staking services. Itâs also in the midst of uncertainty surrounding Silvergate, one of the largest crypto banks, and its solvency. With one crypto banking option potentially being lost in Silvergate, Kraken could be a welcome addition to the ecosystemâs banking options with solid banking relationships and a âdiversified group of banks all around the worldâ.
3. Thailandâs Krungthai Bank joins Visa B2B Connect blockchain payment network
Thailandâs state-owned Krungthai Bank is the first Thai bank to adopt Visa B2B Connect, a blockchain-based digital payment solution for high value corporate payments, which boasts Goldman Sachs as one of its users. The solution is also integrated with FIS and Infosys.
4. Silvergate will liquidate bank, wind down operations
Silvergate Capital Corporation said it will wind down operations and voluntarily liquidate Silvergate Bank, one of crypto's most prominent banks, raising concerns that crypto firms' access to the U.S. banking system will be further concentrated and could chill new businesses from entering the sector. Silvergate had taken out approximately $4.3 billion in federal loans and will suspend its Silvergate Exchange Network (SEN). It appears to be the first major bank collapse since October 2020, and possibly the largest bank to fail since 2009.
5. Coinbase announces Wallet-as-a-Service product to simplify web3 onboarding
Coinbase Wallet-as-a-Service (WaaS) has launched and aims to solve the complex nature of web3 wallets by enabling companies to provide their users with safe, secure, and easy access to web3 wallets. WaaS uses multi-party computation (MPC) cryptographic technology for added security, allowing for self-custody keys to be safe even if a user's device is compromised. Companies such as Moonray, Floor, tokenproof, and thirdweb are partnering with Coinbase to use WaaS in creating web3 experiences accessible to everyone.
6. Coinbase acquires One River Digital to become Coinbase Asset Management
Coinbase acquired fund manager One River Digital Asset Management (ORDAM), which will be rebranded as Coinbase Asset Management (CBAM) and operated as an independent subsidiary to target institutional interest in cryptocurrency. JP Morganâs e-trading survey published last month said that 72% of traders had no plans to trade crypto and 14% were either already trading or planned to within a year.
7. Uniswap wants to launch mobile wallet, but Apple wonât greenlight its launch
Uniswap Labs has launched a new self-custodial mobile wallet that allows users to swap on multiple L1 and L2 networks, including Ethereum, Polygon, Arbitrum, and Optimism. The wallet was built with maximum security and offers various options for storing seed phrases and private keys. Despite having its first build approved, Uniswap Labs is still waiting for Apple to approve the launch. In the meantime, Uniswap is conducting a limited early release on TestFlight to 10,000 users.
8. Sovereign rollups on Bitcoin with Rollkit
Rollkit is the first rollup framework to support sovereign rollups on Bitcoin. This integration allows users to run the Ethereum Virtual Machine (EVM) on Bitcoin as a Rollkit sovereign rollup. The implementation is possible due to Bitcoin's Taproot upgrade and Ordinals' usage of Bitcoin for publishing arbitrary data. Rollkit supports custom execution environments and data availability layers, making it possible to create arbitrary rollups that inherit Bitcoinâs security and data availability guarantees.
9. AXA receives French digital assets license, including custody
The two other well-known institutions with AMF licenses include Societe Generale Forge, which received its license in September last year and Caisse des Depots, the state-owned social impact bank which has long been an innovator in the digital assets sector.
10. Binance.US gets the green light to buy Voyager Digital assets
Binance.US can buy Voyager Digitalâs assets, a federal bankruptcy judge confirmed. Voyagerâs restructuring plan is moving ahead eight months after the crypto lender filed for bankruptcy.
11. Paxos survey finds users want to buy crypto from banks
The survey results found that 75% of people were likely to buy cryptocurrencies from banks if they were offered. Thatâs 12 percentage points up on last year. In the meantime, regulators continue to discourage banks from engaging in the crypto sector, especially after crypto bank Silvergate ran into trouble.
12. Markets trade down after Fed chair's comments Grayscale recovers amid hearing
Bitcoin whipsawed after the release of Fed Chair Jerome Powellâs testimony, falling 1.5% after the close of traditional markets to $22,070. Ether shed about 0.9%. Powell said the ultimate level of interest rates is âlikely to be higher than previously anticipatedâ and that the FOMC is âprepared to increase the pace of rate hikes.âÂ
13. Stablecoin issuer Tether could face AML investigations
A recent article by the Wall Street Journal (WSJ) alleged that Tether Holdings used fabricated sales invoices and used shell companies to retain access to the global banking system in 2018 for its stablecoin. The blockchain company appears to be under investigation by the US Justice Department.
14. Digital yuan enabled in WeChat Pay. More Hong Kong e-CNY trials
Chinaâs pilot digital yuan was enabled in WeChat Pay, the payment wallet of the largest social network in the country. Chinaâs CBDC can now be used for faster payments not only in the WeChat app but in several WeChat mini-programs. One of the stated objectives of the CBDC was to enable interoperability between separate payment apps
đ¸ PE/VC funding Â
The monthly snapshot - by the BFFPâs Research Team
This week, the Blockchain From First Principleâs Research Team wanted to provide you with a snapshot of the industry at monthâs end, as well as a detailed look at industry trends across time.
We have considered the months of January and February 2023. Going forward, you will be receiving the monthly reports separately. Please let us know what you think!
Fund raised
While the pace of new crypto investments is slow overall, February month has witnessed an increase in deal count with value raised remaining lower month on month. Total Funds raised in 2023 as of February month end is $2.6B from 250 deals against $10.6B in 2022 from 344 deals.
Infrastructure projects continue to receive more funds, raising around 700M in 2 months, which accounts for 27% of total funds raised only in 21 deals. Followed by web3 projects raising $585M which accounts for 22.75 in 55 deals. In terms of deal count, web3 topped the chart followed by NFT and other Projects
Top crypto funding deals
The only $100M fund raised in February was by Tokhit, a social app that aims to enable creators, influencers, and Crypto & NFT enthusiasts to socialize and earn crypto rewards. It raised $100M from an international investment fund in the second week of February. The fund will be used to strengthen global reach.
Chain Reaction, an Israel-based startup raising $70M, emerges from stealth to launch chips designed to compute encrypted data The funds will be used for expanding the team and to get its first products out to market this quarter (Q1 2023).
We believe for the next 6 months; infrastructure and web 3 projects continue to receive an increase in flows. Also, on Month on monthly basis, positive growth both in terms of deal count is noted and we expect this to be continued.Â
This weekâs top stories
1. 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.
2. Rebel Girls announces $8M Series A, metaverse expansion
The girl-centered media brand Rebel Girls announced an $8 million Series A funding round led by publishing giant Penguin Random House that will help the company expand to television, theater, and even the metaverse.
3. Open Chat to transfer control to the community after $5.5M 'decentralization sale'
Open Chat, an on-chain messaging app, raised more than $5.5 million in a community-driven crowdfunding sale. The Open Chat team says the project will now be controlled by its community of chat token holders. From now on, Open Chat will be owned and controlled by its community of chat token holders.
4. Tim Draper joins EtherMail's advisory board, leads $4M raise
Veteran venture investor Tim Draper and his venture firm, Draper Associates, led EtherMailâs $4 million raise. MS&AD Ventures also participated in the startupâs pre-Series A raise.
5. Serial entrepreneur and ex-diplomat Trevor Traina raises $25M for 'goof-proof' web3 superapp
Kresus, a startup building a crypto and blockchain âsuper appâ that will let users buy and sell crypto and NFTs, raised a $25 million round led by Liberty City Ventures. Other investors included JetBlue Ventures, Craft Ventures, Franklin Templeton and Salesforce CEO Marc Benioff.
6. Crypto payroll startup Toku raises $20M
Toku, a startup that offers token-based payroll and tax services for startups, raised a $20 million funding round led by Blockchain Capital. Other investors included Protocol Labs, GMJP and Quantstamp.
7. Relai has announced a $4.5M funding round led by Ego Death Capital
The Swiss non-custodial bitcoin platform, has announced a $4.5 million funding round led by Ego Death Capital. The funding will be used to expand the platform's retail Bitcoin on-ramp in Europe, add zero-fee trading, support for Lightning and more.
8. Tensor â the 'Blur of Solana' â raises $3M in seed funding
Solana-based NFT marketplace Tensor raised $3 million in seed funding led by Placeholder VC. Tensor brands itself as âthe Blur of Solanaâ â in reference to its focus on pro traders.Â
9. âFew and Farâ raises $10.5M, US aware of Silvergate situation
The British Virgin Islands-based digital Collectibles Web 3.0 platform, has raised $10.5 million through its first round of funding, focusing on Bitcoin and other digital currencies. The investment firm Pantera Capital led the funding round, previously backed Pinata as well as invested in non-fungible token (NFT) distribution for Web 3.0 developers.Â
10. Ethereum L2 Scroll reaches $1.8B valuation in new funding round
Scroll, a startup building an Ethereum scaling network, raised a $50 million round of funding that brings its valuation to $1.8 billion. Investors in the round included Polychain Capital, Sequoia China and Bain Capital Crypto.
11. Crypto lender SALT raises $64.4M to resume operations
SALT Lending has closed a $64.4 million Series A funding round from a share sale to accredited investors less than three months after a planned sale fell through due to the implosion of centralized crypto exchange FTX. SALT will use the capital toward new products and its growth strategy, according to a draft press release provided to CoinDesk.
12. nealthy raises $1.3M pre-seed round
nealthy, a Web3 startup for investing in NFTs and cryptocurrency has announced it raised $1.3 million in pre-seed funding. The round was backed by experienced Web3 investors, including renowned crypto celebrity âDonGeraldo.â
13. Cryptoâs most ESG-friendly project C+Charge secures BitMart CEX listing
C+Charge has raised $2.9 million from investors who have bought into its mission to democratize the carbon credits industry.
14. NFT finance protocol Insrt raises $2.2M in SAFT round
Insrt Labs raised $2.2 million from Hashkey Capital, Infinite Capital and others. The Insrt Finance protocol lets users gain âfractional NFT spot exposure combined with passive yield farming.â
15. Hosts of Bankless podcast raising $35M Crypto Venture Fund
David Hoffman and Ryan Sean Adams, hosts of the crypto podcast and newsletter Bankless, are raising a $35 million venture capital fund to make seed investments in crypto and blockchain startups. The two hosts will be general partners along with investor Ben Lakoff.
âď¸ Policies and laws
1. Powell says wholesale digital dollar may bypass Congressional approval
Whereas in the past, officials had noted that the Fed had no intention of issuing a CBDC without explicit support from the executive branch and Congress, this is the first time the central bank clarified that this might not be needed for a wholesale option.
2. Thailand offers tax breaks to token issuers. But token types restricted
Thailand distinguishes between many types of tokens, so the primary beneficiaries of this tax break are likely to be property developers for real estate tokenization. there would be 128 billion baht ($3.6bn) worth of investment token offerings in Thailand, resulting in foregone tax revenue of 35 billion baht ($1 bn).
3. Comptroller sees crypto-regulatory lessons in failure of BCCI Bank
The Comptroller of Currency compared the FTX cryptocurrency exchangeâs collapse to the BCCI Bankâs failure in 1991. BCCIâs demise triggered changes in banking regulations, not least the need for a bankâs home regulator to have visibility over its entire operations. In response to the BCCI failure, the US introduced the Foreign Bank Supervision Enhancement Act.
4. Federal Reserveâs Powell: we donât want to strangle crypto innovation, but sector is a mess
The central bank's chairman said the Fed is sticking to its warnings that banks should be âquite cautiousâ about getting involved in digital assets. We have to be open to the idea that â somewhere in there â there is technology that can be featured in product innovation that makes people's lives better
5. Silvergate's Collapse May Spell Regulatory Trouble for Crypto
Silvergate appears to have sold off billions of dollars worth of bonds at a market loss to keep up with withdrawals, which in turn meant it no longer met certain regulatory requirements that indicated it was perfectly fine. It remains to be seen if Silvergate really does fail or if it finds a path to survival. It also remains to be seen just who will pick up its former clients
đ Reports, here is the TLDR
Real World Assets (âRWAsâ) are assets that exist off-chain but are tokenized and brought on-chain to be used as a source of yield within DeFi. The most recent bear market has been an especially notable period of development and growth within the RWA space. TradFi institutions, such as Goldman Sachs, Hamilton Lane, Siemens, and KKR all have announced that they are working towards bringing their real-world assets on-chain.
In this report, Binance investigates the rapidly evolving RWA ecosystem and major players within the RWA space. More specifically, it breakdowns what RWAs are, how RWAs work, and the purpose behind RWAs. Lastly, it provides an overview of important trends and narratives to watch as the RWA ecosystem evolves. Here is the TLDR:
The potential impact that RWAs could have on DeFi seems transformative.
RWAs can offer yields to DeFi which are sustainable, reliable, and backed by traditional asset classes.
RWAs can render DeFi to become more compatible with external markets, resulting in greater liquidity, capital efficiency, and investment opportunities.
RWAs allow DeFi the ability to bridge the gap between decentralized financial systems and traditional financial systems.
RWAs can represent tangible assets, such as gold and real estate, as well as intangible assets, such as government bonds or carbon credits.
The main driving force behind bringing real-world assets onto the blockchain is the belief that, in the long term, DeFi will offer unique opportunities and market efficiencies to asset holders, which cannot be found in traditional financial systems.
The ability to easily fractionalize and disperse RWAs in DeFi renders previously unfractionalized, total sum, private credit investments to become accessible to a new set of investors.
Fixed income is the predominant market in the RWA space.
There are a number of topical trends that are shaping the evolution of the RWA ecosystem: layer 1 RWA protocols, regulation and enforcement mechanisms, and macro environment.
đ Charts of the week
Real-Time Trade Settlements in the current landscape vs blockchain landscape by Wipro
Asset Tokenization initiatives by different banks
đĄMetaverse and NFT news, trends, and insights
1. Why Hennessyâs web3 brand H3NSY makes sense
Two weeks ago, LVMH-owned cognac brand Hennessy unveiled a web3 brand H3NSY. It has already been prolific in launching pricey limited edition bottles as non-fungible tokens (NFTs) â as in $250,000 per bottle. And it followed that up with a luxury web3 social club Cafe11 enabling participants to attend cognac tastings and more. Now it wants to build a hub for creators, cultures, communities, and all its web3 activities.
2. Blur bid incentives appear to skew market, offers on NFTs above 'buy now' prices
NFT traders on Blur routinely receive bids higher than the âbuy nowâ price for items.This could be due to the trading incentives offered to market participants who create liquidity on the platform.Â
3. LifeForce becomes latest web3 gaming shop to lean into user-generated content
Game development studio LifeForce Games is jumping on the user-generated content bandwagon. Its new project lets players create their own games, including different modes and play styles.
4. Gordon Ramsayâs Sandbox avatar NFTs coming to the metaverse
The Sandbox is releasing 2,333 Gordon Ramsay avatars players can use as their digital identity on the metaverse platform. The company has been successfully forging partnerships with corporate and celebrity partners and hopes this will spur more building by independent creators.
5. Yuga Labs' Bitcoin NFT collection TwelveFold to be auctioned Sunday
The auction for Yuga Labsâ first Bitcoin NFT collection, TwelveFold, will begin at 3 p.m. PT Sunday. Of the 300 NFTs on offer 288 will be available for sale. There will be 12 held back for contributors, donations and philanthropic efforts.
đŚCompany spotlight
The company: đ Privy đ is a simple, powerful API to manage user data off-chain, so companies can build delightful products without siloing user data or putting their privacy at risk. Privy allows companies to spend more time focused on products and user experience, and less time on compliance, infrastructure and damage control. This is allows users to stop worrying about having their data leaked every time they fill in a form. Privy belives Web3 should be about empowering users, not just decentralizing tech stacks.
The story: Privy has raised a total of $8.3M in funding over 9 rounds. Their latest funding was raised on Oct 25, 2018 from a Series A round. Privyâs team comes from web3 and self-driving to reshape data infrastructure on the web. We recognize the trade-offs between convenience and decentralization at play online. If you want to contribute to building future-proof privacy infrastructure, join the team now.
Why should I care: Privy states: on their own, blockchains are terrible for privacy. They excel at transparency, enforcing provable claims, but they are a public state. Identifiable user data should not be put on-chain, even encrypted (ciphers break). That is why Privy will bridge access between public (on-chain) data and private (off-chain) data so you can build successful products without putting your users at risk.
đ Blockchain, Crypto, and Web3 events calendarÂ
âŚ.for the next couple of months
March 2023
Empower: Energizing Bitcoin 2023 | Mar 8-9, 2023 | Houston, TX, USA
Crypto Expo Dubai | Mar 8-9, 2023 | Dubai, UAE
Blockchain Economy Dubai Summit | Mar 8-9, 2023 | Dubai, UAE
Blockchaincon Latam 2023 | Mar 9-11, 2023 | Lima, Peru
World Digital Assets Investment Summit | Mar 10-11, 2023 | Dubai, UAE
Arts DAO Fest | Mar 11, 2023 | Dubai, UAE
Women In Blockchain Summit | Mar 13-15, 2023 | Limassol, Cyprus
Blockchain & Fintech Week Tel Aviv | Mar 13-15, 2023 | Tel Aviv, Israel
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 Intâl 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
đ MoneroTopia 2023 | May 5-7, 2023 | Mexico City, Mexico
đ Blockchain Economy Istanbul Summit | May 8-11, 2023 | Ä°stanbul, Turkey
đ NFT Tallinn | May 8-10, 2023 | Tallinn, Estonia
đ The Crypto and Digital Assets Summit | May 9-10, 2023 | London, UK
đŠâđťThe job fair
Input Output (IOHK) : Scrum Master (Smart Contracts) - Plutus, Remote/UK
Aldrin Labs : Senior Front developer, Remote/UK
Consensys : Research Engineer, Remote/United States
Consensys : Research EVM spec, Remote/ United States
Securitize : Product Transfer Agent,New York
Glassnode : Financial Accountant, Remote/Europe
đThe term of the week
Child Chain: a separate Blockchain attached to a parent Blockchain, or Side Chain. Child Chains are intended to allow a Blockchain network to Scale globally, as users can transfer Assets between the parent Blockchain and the Child Chain.
Child Chains also separate transactions and data that do not affect security from those that do, which leads to a smaller Block size. Thus, Child Chain Blocks can be verified more quickly than Blockchain Blocks, increasing the number of transactions that can be processed per second. An example is Ignis, which is a Child Chain on the Ardor network.
đ 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.