Weekly Alpha Leakš°: Ethereum Classic Mining Dilemma & SEC Securities Worries
M6 Weekly Alpha Leakš° - Week of July 25, 2022
In the world of crypto ā
The markets rallied this week despite macroeconomic recession talks after the announcement that the US economy shrank by 0.9% during the second quarter of 2022. Weāre also moving slowly but surely towards the highly anticipated Ethereum Merge, with the final update testing before the Merge, the Goerli/Prater Merge, taking place August 6-12th.Ā
Ethereum Classic, the "original" Ethereum before the 2016 hard fork, has seen an impressive run this week, being primarily attributed to speculation over what current Ethereum miners will do post Merge. Nearly $5B of graphics card mining machines and ASIC Ethereum mining machines will need to find a way to continue mining after Ethereum turns to POS and the question is what route will these players choose to take when they arenāt able to mine ETH anymore?
Chinese miners currently have three different opinions on Ethereumās switch to POS. One view supports ETC, another supports forking PoW ETH, while the final group supports switching to other POWs such as Kadena, Starcoin, Aleo, Ckb and Conflux.Ā
Another development to keep eyes on includes the regulatory landscape with The SEC investigating Coinbase for allowing trading in several tokens that should have been listed as securities. Coinbase adamantly claims that they do not list securities, however many crypto firms could face fallout from a precedent setting SEC insider trading case against a former Coinbase employee.
The SEC will need to prove tokens are securities in that case and that could have far reaching implications for the crypto space. Up until now, participants in the crypto space have mostly been working in a gray legal zone without definitive legal clarity, so itāll be a welcome conclusion once builders have definitive answers as to what they can and canāt legally do.Ā Ā
In the world of NFTs and the Metaverse š¼
As usual, this sector saw the most VC funding interest with blockchain gaming, web3 and NFT infrastructure being standout categories. VCs are still betting hard that the future will see an intertwine between real life, gaming and blockchain technology.
Despite high expectations for the āmetaverseā, Meta reported losses of $2.8B for its metaverse-focused division, Reality Labs, as the firm missed on earnings and revenue for the second quarter. Itās been speculated that itāll still be years before these enterprises are profitable.Ā Ā Ā
The Metaverse is also fraught with its own regulatory hurdles, as we saw Yuga Labs threatened with a possible class-action lawsuit, alleging that Yuga Labsā Bored Ape Yacht Club NFTs and ApeCoin are securities that failed to deliver on promised returns. Also interesting to note that Apecoin staking is expected by this Autumn.Ā Ā
In another example of how NFTs may blend more into the real world, Binance has launched the pilot of its NFT ticketing solution with football club SocietĆ Sportiva Lazio for the 2022 to 2023 season. Integrations of NFTs with ticketing have been touted as potential real world use cases so itāll be interesting to see how these sorts of endeavors develop. Will they be successful?Ā
Overall, despite the crushing bear market weāve been experiencing since the markets began falling last November, the state of crypto seems to be one filled with activity and potential - weighted against a less than inspiring macroeconomic backdrop. Protocols and teams are building, technology is being developed, regulatory clarity is slowly being put in place, and real world use cases and utility are slowly being accepted. The shift from wild speculative vaporware is upon us.Ā
š Data Highlights of the Week š
From our special guest contributor: Patrick Scott from Dynamo DeFi
The Optimism layer 2 rollup posted the strongest growth of any DeFi ecosystem this week. Total-value locked grew 41% while daily transactions increased 54% week-over-week. Source 1 Source 2
Polkadot parachains have been quietly gathering momentum. The total-value locked on the 3 largest parachains,Ā Parallel, Acala, and Moonbeam, has now grown by 30%, 228%, and 42% respectively over the past month. Source
The simultaneous growth in both Ethereum layer 2s and Polkadot parachains reflects a strong desire for blockchain scaling solutions.
GMX, an on-chain, decentralized perpetual exchange, grew its revenue 30% week-over-week, posting its highest revenue day of all time on July 29th. This strength, even amidst a bear market, establishes on-chain trading as a trend to watch. Source
ā Crypto Highlights of the Week ā
Ethereum daily active addresses reached a new all-time high. Over 1.1M addresses made an ETH transactionĀ
Introducing Synapse Chain: A novel smart contract execution layer built atop Synapseās generic cross-chain messaging system and value bridgeĀ
Three funds of Cathie Woodās Ark Investment Management sold a total of more than 1.4M shares of Coinbase Global (COIN) due to reports that it is being investigated by the U.S. Securities and Exchange CommissionĀ
Lido DAO votes no to selling 1% of the LDO supply worth $14.5M to Dragonfly Capital with ā majority vote against. ~ 600 DAO members participated. Lido proposes new terms for treasury token sale to Dragonfly Capital. Still calls for selling 10M LDO tokens to Dragonfly. However with a one-year lockup. The lack of a vesting requirement in the previous arrangement was a major issue for the Lido DAO communityĀ
Harmony Reimbursement Proposal for $100M Horizon Bridge Hack Incident - Either a 100% reimbursement via 4.97B new ONE tokens, or a 50% reimbursement with 2.48B ONE tokens. Causes backlash due to inflationary pressure such issuance would causeĀ
Arbitrum has begun testing its Nitro upgrade and, assuming the test goes well, will implement it within a few weeks. The upgrade is designed to increase the number of transactions the network can process while lowering costsĀ
A Solana-themed store is set to open its doors in New York City. Called Solana Spaces, the new store is located in Hudson Yards and is being launched in collaboration with the Solana FoundationĀ
Bitfinex, Tether and Hypercore announced the launch of a fully encrypted platform, Holepunch, for building peer-to-peer applications. As part of the initiative, launched Keet, an encrypted application capable of facilitating real-time audio and video calls, text chat and file sharing. Have invested $10M to date in the new project and plan to invest up to $100M moreĀ
Aurora Launches $VOTE token - Empowering its Community with DAO Governance. Earned by staking $AURORA on Aurora+Ā
Nirvana, an algorithm stablecoin protocol based on Solana has suffered a flash loan attack of $3 million
FTX announced a proposed plan to provide early liquidity for Voyager Digital customers with bankruptcy claims. Voyager responded to a proposal from FTX and Alameda by claiming that it had āmisleading or outright false claims.āThe firm argued that the plan to offer customers liquidity on their funds locked up on the platform would harm customers but benefit āAlamedaFTX.ā FTX CEO Sam Bankman-Fried said that Voyagerās priority should be to return customers whatever assets it has leftĀ
Tether says it holds no Chinese commercial paper and its total commercial paper exposure has been reduced yet again toĀ ~3.7B (from 30B in July 2021) with plans to further decrease to ~200M by the end of August and to zero by end of October/early November 2022Ā
Blockchain infrastructure company Chain completes $100M acquisition of MDT token ecosystem. Will involve a token conversion in which MDT will become Chain's native token XCNĀ
Fantom held a governance vote to divert a third of its burn fees to fund a new vault to support ecosystem projects. The vote passed with almost 100% approval from all participants. Will use 10% of its transaction fees, a third of current 30% burn fee. Burn rate will reduce to 20%Ā
Moonbeam is now integrated with Osmosis to allow token swaps from Polkadot to the Cosmos ecosystem. Axelar network will serve as the bridge infrastructure for the cross-chain swapsĀ
The Central African Republic has raised $1M from the sale of its Sango Coin crypto on the first day of the public sale. Public sale price of $0.1, and a 1-year lock-up period. It runs on the Bitcoin sidechain and will Grant holders Citizenship Program, e-Residency Program, Land Property acquisition, etcĀ
Kraken is under federal investigation, suspected of violating U.S. sanctions by allowing users in Iran and elsewhere to buy and sell digital tokensĀ
The CEO of crypto exchange KuCoin says it is launching an "Anti-FUD Fund" to track down and potentially take legal action against "FUDers" and educate crypto users on identifying misinformation
KuCoin has joined the RocketX network of liquidity providers to help users with the best rates from Binance, 1inch, Paraswap, Uniswap, etc with 200+ exchanges. RocketX is the āMulti-Chainā CEX & DEX aggregator that helps users swap any token on ANY chainĀ
FTX.US has opened stock trading to users in all 50 American states - wonāt be charging trading fees or use a Robinhood-like payment for order flow business modelĀ
SushiSwap Pay Package for New āHead Chefā Sparks Outcry as Community Votes. Would receive $800,000 in stablecoins annually plus 600,000 SUSHI tokens over a four-year vesting period, with an additional 350,000 SUSHI set aside for bonuses to be awarded as new products are shippedĀ
Bitcoin miner Core Scientific closed a deal to host 75 megawatts worth of hardware capacity.The agreement will bring in a total of $50M per year in revenue once the miners are fully installedĀ
Clearpool, an uncollateralized stablecoin lending protocol, has expanded to Polygon - 2nd blockchain for Clearpool after its Ethereum launch in March 2022Ā
Oasis Labs has become Metaās technology partner and will use its platform to safeguard information. The project will advance fairness measurement in AI modelsĀ
Cardanoās anticipated Vasil hard fork delayed again due to further testing - could be a few more weeks of delayĀ
š¼ NFTs/āMetaverse Highlights of the Week š¼
The Federal Trade Commission filed suit to stop Facebook from acquiring Unlimited and its virtual reality fitness app to stop Facebook from monopolizing the metaverse
Yuga Labs Teased Upcoming Utility For Meebits and from now on will get a 5% royalty on secondary sales of Meebits (on OpenSea, LooksRare, etc)Ā
Gods Unchained developer Immutable lays off around 8% of staff (~20 employees). In June launched a $500M fund for web3 game adoption and also raised $200M in Series C funding in March, reaching a $2.5B valuationĀ
KuCoin has released its first Fractional NFTs of Bored Ape Yacht Club - hiBAYC is an ERC-20 token representing 1/1,000,000 ownership of one BAYC in the collection vaultĀ
Launch of [LEDGER] Market, the worldās first-ever secure mint and secure distribution platform for curated NFT drops from influential and leading cultural brands and artists mints out in 24 hoursĀ
Steve Aoki is entering The Sandbox. 3,333 avatars - each playable inside The Sandbox unlocking unique functionalities & giving owners the possibility to earn $SANDĀ
The Sandbox partners with Gravity to introduce Ragnarok to the metaverseĀ
Solana-based data platform Step Finance has acquired NFT data insights platform SolanaFloorĀ
Omni X launches website and announces Omnichain NFT Marketplace Beta - powered by Layerzero Labs' omnichain protocolĀ
Miami plans to roll out an NFT collection with the help of Mastercard, Salesforce and Time - launch in December, after the Ethereum Merge. 5,000 NFTs designed by 56 local artists to represent the 56 square mile area of the cityĀ
The Wharton School out of the University of Pennsylvania launched a six-week online course about business in the metaverse -āBusiness in the Metaverse Economyā is one of the first business courses about the metaverse to come out of an Ivy League school including such classes at Duke University and Stanford UniversityĀ
š Fundraising Highlights of the Week š
Crypto venture investment firm Variant across two new funds targeting the beleaguered market for Web3 and DeFiĀ
Layer 1 Aptos led by FTX Ventures, Jump Crypto plus investment from a16z crypto, Multicoin Capital and Circle VenturesĀ Ā
UK-based banking giant Barclays takes up stake in $2B cryptocurrency firm CopperĀ
Unstoppable Domains, a firm building out digital identity markers as NFTs, raised $65M reaching a $1B valuation in Series A funding led by Pantera Capital. Will reduce friction of crypto payments between applications, and to build out reputation-based reward programsĀ
Web3 Gaming Company Ambrus Studioās token funding has reached valuations of up to $65M. The round was led by Spartan Group & M13Ā
Gary Veeās VeeFrieds Raises $50M in Seed Funding Led by a16Ā
Reltime, a Layer 1, Proof of Authority Web3 ecosystem, Raises $50MĀ
Web 3.0 casino game distribution platform Vegas One raises $50MĀ
Aftermath Islands Raises $25M to accelerate product roadmap, adoption of the Aftermath Islands Metaverse and scaling the ecosystem while supporting the growth of NFTsĀ
āāCross-chain messaging protocol Nomad raised $22.4M in seed funding round led by Polychain. + Coinbase Ventures, OpenSea, CryptoCom Capital, Wintermute, Gnosis and PolygonĀ
Topl, creator of a purpose-built blockchain that helps companies track sustainable initiatives, raised $15MĀ
Sweat Economy, the team behind health app Sweatcoin, closed a $13M round led by Spartan Capital - source
Aurigami, a DeFi protocol based on the Aurora network, raised $12M in token rounds. Dragonfly Capital and Polychain Capital co-led the private token round
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