ZKRollups, Nasdaq on Crypto Custody, PwC with Chainlink, CFTC sues Binance, Could DeFi become a “top 10 bank” within 2 years?, OP Stack with Account Abstraction, Crypto Asset Accounting Standard
30 March 2023
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Table of Content
🗞️The 14 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
📅Blockchain, Crypto, and Web3 events calendar
👩💻The job fair
📚The term of the week
📎Miscellaneous resources
🗞️ The 14 news you should be aware of
1. Winklevoss's Gemini Gears Up to Launch Overseas Crypto Derivatives Exchange
Gemini, a cryptocurrency exchange led by the Winklevoss twins, is reportedly working with market makers to introduce overseas crypto derivatives. This move follows increased attention on international crypto derivatives exchanges after the US CFTC's lawsuit against Binance. Gemini's actions come amid FTX's downfall, opening opportunities for trading platforms to expand into derivatives trading. Coinbase Global is also said to be exploring a similar path. Recently, Gemini faced challenges such as a lawsuit with the SEC and industry-wide downturn-related job cuts.
2. Linea, a Developer Friendly zk-Rollup, Powered by ConsenSys
Linea, the next evolution of ConsenSys zkEVM, is an L2 solution for Ethereum, powering a new generation of decentralized applications. The testnet has been opened to developers, users, and protocols. Linea aims to provide a seamless developer experience by integrating with popular tools like MetaMask and Truffle. The platform leverages zero-knowledge proofs and full EVM equivalence, enabling scalable dApps without code changes or smart contract rewriting. Faster transaction speeds, reduced gas costs, and enhanced composability make Linea another good potential solution for Ethereum scaling.
3. Nasdaq Eyes Crypto Custody Launch by End of Second Quarter
Nasdaq aims to launch its digital asset custody services by the end of Q2, as it works on obtaining technical infrastructure and regulatory approvals. The exchange group has applied for a limited-purpose trust company charter from the New York Department of Financial Services. Nasdaq's move into crypto custody, initially targeting Bitcoin and Ether, is the first major step toward offering a wide range of services for its digital assets division. The company joins other financial giants like BNY Mellon and Fidelity in providing crypto safekeeping services.
4. Digital currencies may pose risks to banking sector stability, says US gov researchers.
According to a recent paper by the Treasury’s Office of Financial Research (OFR), the integration of digital currencies into the financial system could increase household welfare but spell danger for the stability of the banking sector. The findings suggest that the full integration of digital currencies would make banks less profitable. That’s because it leads to a decrease in the spread of bank deposits.
5. Safemoon liquidity pair compromised in $8.9 million hack
A bug allowed an exploiter to burn a majority of SFM tokens in the Safe moon liquidity pool, artificially raising the token’s price so the contract’s WBNB could be drained in one transaction, on-chain records show. Almost $8.9 million in total was lost to the hacker.
6. Nvidia to offer metaverse services under a partnership deal with Microsoft
The partnership is to offer the firms building in the metaverse -a range of services that will assist in building realistic virtual worlds. The alliance will also see the integration between Nvidia’s Omniverse and Microsoft 365 programs like Teams and OneDrive. Experts believe that Microsoft is banking on the proliferation of its Windows operating system to catch up with other innovators in the space
7. The Algorand Foundation Branches Out to India
Algorand’s India plan is broken up into three pillars – broaden the Web3 developer base through education and events at universities, focus on startups that are transitioning from Web2 to Web3, and focus on high-profile use case partnerships with the central and state governments.
8. SWIFT to progress blockchain corporate actions pilot to the next stage
The swift analysis found that asset managers often receive notifications from up to 100 different sources about the same corporate event, and the data is often different or contradictory from one source to another. Hence to address this SWIFT is to create a golden copy of the data which is shared amongst the participants through its Pilot.
9. Voyager sent $150 million of USDC to Circle to redeem for US dollars
On-chain data show that Voyager Digital has sent $150 million of USDC to Circle to eventually redeem for U.S. dollars. The transfer is part of a larger strategy of asset offloading, an effort undertaken despite objections from regulators that say Voyager’s plan to sell its crypto may violate securities law
10. The StoneX tie-up with DLT-based ACX for carbon credits could be a big deal
ACX provides exchanges for voluntary carbon credits and various blockchain-based tokenized carbon assets. The deal is so promising considering ACX has many of corporate clients involved in commodity trading. These corporates are potential buyers of carbon credits. This agreement also solidifies StoneX’s long-term commitment to carbon trading and creates increased transparency in this fast-moving market.
11. MicroStrategy buys $150 million of bitcoin, prepays Silvergate loan
MicroStrategy scooped up about $150 million of bitcoin over the last month, bringing its total hoard of the cryptocurrency to a little more than $4 billion. The company also said it paid off a loan from Silvergate Bank. MicroStrategy had taken out the $205 million term loan, which was set to mature in 2025
12. Eurex to launch Bitcoin Index futures
Eurex announced plans to launch futures based on the FTSE Bitcoin Index on April 17. It already has BTCetc ETN Futures listed with physical delivery. Eurex is the largest options and futures exchange in Europe and is owned by the Deutsche Börse.
13. Zebedee unveils Bitcoin Lightning-powered cross-border payments feature
Zebedee unveiled a borderless transaction feature using the Bitcoin Lightning Network to simplify global payments between the U.S., UK, EU, Brazil, and the Philippines. Strategic partnerships with Pouch. ph and Bipa enable users to instantly transfer funds across multiple currencies and countries for a fraction of a cent.
14. PwC Germany partners with Chainlink Labs targeting enterprise blockchain applications
Chainlink Labs, the founder of the Chain-link blockchain oracle network, is working with PwC Germany as an integration partner to encourage enterprises to launch blockchain applications, mainly on a public blockchain. While regulators seem hesitant about public blockchain, there’s certainly interest from enterprises.
💸 PE/VC funding
1. Restaking protocol EigenLayer closes $50 million raise
EigenLabs, the team behind restaking protocol EigenLayer, closed its $50 million Series A funding round. The round is led by Blockchain Capital and sees participation from other investors including Coinbase Ventures and Polychain Capital.
2. Hydra Ventures DAO raises $10 million for fresh take on fund of funds
Decentralized autonomous organization Hydra Ventures has raised $10 million to back investment DAOs. The DAO fund of funds has secured funding from investors including 1kx, ConsenSys and Seed Club.
3. Middleware platform Particle Network raises $7 million
Middleware platform Particle Network has raised $7 million from investors including ABCDE, Animoca, Longhash Ventures, GSR Ventures and HashKey. The startup previously raised $1.8 million in a pre-seed funding round in April last year.
4. Irene Zhao's web3 social platform So-Col unveils $4.5 million in new funding
So-Col raised $4.5 million in two rounds. Investors include DWF Labs and Blockchain Capital. Both rounds were token rounds, So-Col founder Irene Zhao told The Block.
5. Fetch.ai announces fresh funding at a $250 million valuation
Fetch.ai announced that it’s raising $40 million from DWF Labs. The funding is a mix of equity and FET tokens at a combined valuation of around $250 million, Fetch.ai founder and CEO Humayun Sheikh told The Block.
6. Orderly Network raises fresh funding at a flat token valuation of $200 million
Orderly Network raises funds from CoinDCX Ventures in a SAFT round. The Near-based trading infrastructure protocol plans to add perpetual trading and support for other blockchains.
7. Metaverse construction firm LandVault extends Series B with $3 million raise
Metaverse construction start up LandVault topped up its Series B round by $3 million, to bring the virtual world and web3 investors on board. The Sandbox, the Gemini Frontier Fund, HodlCo and hedge fund Kingsway Capital are now on its cap table.
8. Solana-based derivatives protocol Cega raises $5 million to expand on Ethereum
Cega raised $5 million in a seed extension round led by Dragonfly Capital. The Solana-based derivatives protocol focused on exotic options is set to launch on Ethereum.
⚖️ Policies and laws
1. FASB opens consultation on draft crypto-asset accounting standard
FASB published its draft accounting standard for crypto assets and opened a consultation that runs until June 6. The new standard’s core is to use fair value for crypto-asset accounting. In other words, mark-to-market prices. Before the standard comes into force, crypto-assets are accounted for as intangibles, similar to goodwill. NFTs were not covered in the draft because of insignificant amounts on balance sheets.
2. CFTC sues crypto exchange Binance over derivatives trading
Commodity Futures Trading Commission (CFTC) alleges that Binance deliberately targets U.S. customers for derivatives transactions, despite not registering with CFTC. It also accuses the group of violating anti-money laundering rules. Recently NYDS instructed Paxos to stop allowing new Binance stablecoin (BUSD) issuances.
3. G-7 Will Push for Tighter Global Crypto Regulations: Report
G-7 discussions on regulating crypto will accelerate ahead of a meeting of financial ministers and central bankers from the countries in mid-May. Japanese Prime Minister Fumio Kishida will host this year's G-7 summit in Hiroshima. G-7 members will state their joint intentions for tougher crypto policies in a leaders' declaration, the report added.
4. Crypto AML rules passed by MEPs
The European Parliament’s anti-money laundering regulation hopes to close a regulatory gap, obliging DAOs, NFT and DeFi platforms to comply alongside traditional finance firms. Policymakers placed payment caps on commercial transactions from self-hosted wallets.
5. Canada to ask pension funds to disclose crypto exposure
Canada's national government said federally regulated pension funds in the country will need to disclose their crypto assets exposure to the Office of the Superintendent of Financial Institutions (OSFI). The move comes after several high-profile bankruptcies and to protect the Canadian’s retirements.
📚 Reports, here is the TLDR
According to a recent working paper published by the Office of Financial Research, If Digital currency is fully integrated with the financial system, banking-sector stability may suffer, yet household welfare may improve significantly. The authors modelled a financial sector where digital currencies coexist with bank deposits, and households hold both forms of liquidity. This model allowed the authors to identify the financial stability consequences of digital currency.
The theoretical results suggest that financial frictions may limit the potential benefits of digital currencies, whether issued publicly as a central bank digital currency (CBDC) or privately as stablecoins. In addition, the authors found that financial system volatility decreases when digital currencies are fully integrated, and household welfare improves, yet banking-sector stability suffers.
Specifically, with the full integration of digital currency:
The probability of a banking sector crisis increases -A decline in deposit spreads is the primary reason a crisis’s probability increases with digital currency issuance. A fully-integrated digital currency depresses bank deposit spreads, particularly during crises, which limits banks’ ability to recapitalize following losses.
In addition, because banks are less able to rebuild equity after adverse shocks, banks, on average, have lower equity. Accordingly, bank valuations decrease significantly. As a result, the probability the banking sector is in crisis or a distressed state can grow significantly.
Household welfare can improve - Fully integrating digital currency into the financial sector would increase household welfare, and these welfare consequences are potentially large. For example, household welfare could increase by 2% in terms of consumption, even though at this level of digital currency, the probability of crises doubles.
System volatility decreases - Financial system volatility declines with the full integration of digital currency. This decline is primarily reflected in a decrease in the volatility of asset prices. While financial markets improve with lower volatility and higher prices, the financial sector suffers because the banking sector is at greater risk of insufficient capital levels.
As interest in these emerging technologies grows, the threat to financial stability posed by integrating digital currencies into the traditional financial system needs to be examined from multiple angles, considering potential effects on bank equity levels and consequences for runs.
The authors’ financial stability focus for this working paper is on the risk that banks have insufficient equity capital following losses from their investments. Investment losses, not runs per se, create instability in this context. Other analyses, which considered whether the benefits of creating a CBDC outweighed the risks, found that at least one risk—bank runs—is not as big as initially feared. Authors of this complementary analysis concluded that the threat of investors running to a CBDC leads banks to do less maturity transformation, and policymakers can use information flows from the CBDC to react quickly.
Digital currencies have the potential to become an alternative to traditional money. Imperfections in financial markets nevertheless limit their potential benefits. At some point, there may be a robust range of digital currency issuance in which the welfare-stability trade-off is in favour of digital currency, even when digital currency is costly to issue in a competitive environment.
📈 Charts of the week
Could DeFi become a “top 10 bank” within 2 years?
DeFi has shown the potential to disrupt the financial sector. Within 2 years of its inception, DeFi’s TVL rose to a size comparable to a medium/big size bank in the US.
Major differences between Web3 apps and Web2 apps
💡Metaverse and NFT news, trends, and insights
1. The Metaverse Is Facing a ‘Cooldown Moment’ Amid Crypto Winter
That isn’t necessarily a bad thing, Cathy Hackl, chief metaverse officer at Journey. “A lot of us are continuing to build”. The metaverse is a longer-term vision and one that she said is “going to be the future of the internet.” That’s despite brands deciding the metaverse is not for them.
The metaverse, is facing a harsher reality. Walt Disney Co. has shut down the division that was developing its metaverse strategies, The Wall Street Journal reported this week. Microsoft Corp. recently shut down a social virtual-reality platform it acquired in 2017. And Mark Zuckerberg, who renamed Facebook as Meta Platforms Inc. META to signal his seriousness about the metaverse, focused more on artificial intelligence on an earnings call last month.
3. Disney Eliminates Its Metaverse Division as Part of Company’s Layoffs Plan
The unit, once seen as developing a new form of storytelling, had about 50 employees. The small division that was developing metaverse strategies, according to people familiar with the situation, as part of a broader restructuring that is expected to reduce head count by around 7,000 across the company over the next two months.
4. Elon Musk Bids Farewell to the Metaverse
The CEO of Tesla compared what was presented as the next big thing in tech a year ago to a disease that had infected the world.
5. The dream of interoperability: is a cross-platform metaverse possible?
There’s no common list of the metaverse’s desired features, but three I-words pop up in most conversations about it: immersion, interactivity, and interoperability.
6. The next frontier: Israel taps AI and metaverse for aid in digital diplomacy
Speaking in many tongues with the aid of a Tel Aviv startup, the Foreign Ministry is boldly venturing into the virtual realm to get its messages across to friends and foes.
7. Hugo Boss enters metaverse Fashion Weel with an immersive AI-Inspired showroom experience
BOSS is taking a bold step into the Metaverse on the heels of a critically acclaimed Spring/Summer 2023 Fashion Show in Miami. This Metaverse Fashion Week (March 28-31), BOSS fans can dive into a virtual BOSS showroom and enjoy an immersive, interactive experience.
📅 Blockchain, Crypto, and Web3 events calendar
….for the next couple of months
March 2023
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
Admeal : Web3 product Manager, Remote
Fintech LLC : Project Manager, New York
Axiom :Senior Smart Contract Engineer, New York
NDAX : Full stack Block chain Developer, Canada
Sidechain.so : Blockchain Developer,Newyork
📚The term of the week
Metadata: data that provides information about other data, but not the content of the data. In the context of NFTs, Metadata can be On-Chain or Off-Chain. Regardless, the Metadata describes the NFT’s essential properties and contains the link to the underlying Digital Asset (often a JPEG file or video stored online).
📎 Miscellaneous Resources
An Op Stack that Turns an iPhone Into a Hardware Wallet with Full Account Abstraction Support
Dune’s LLM Roadmap: Transforming the Way You Interact with Data
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