From October 9th to October 15th
State of Crypto Fundraising Q3 2023 and State of Blockchain gaming.
Please note that on November 8th, INSEAD Future Forum will cover” How will Web3 and AI transform finance”. This will be amazing.
Summary (links are an extract of links below)
Not so many important news this week (beside JP Morgan tokenising Blackrock shares, and an info that Bitstamp would be in talks to help three large European banks begin offering crypto services).
But many interesting reports, starting with Messari “State of Crypto Fundraising Q3 2023”, highlighting that infrastructure and DeFi are the highest funder sectors (see below). Also an interesting “State of blockchain gaming in Q3 2023” for DappRadar, showing a 12% increase in daily active wallets QoQ; useful to better know this major sector, leading the consumer apps fundraising in Q3 2023. To go deep into DeFi, a technical but interesting in its approach of DeFi, categorising smart contracts, the European Securities and Markets Authority risk analysis on decentralised finance.
Finally, and somewhat concerning, Kaiko’s deep dive reveals weird movements in Poloniex and HTX (ex-Huobi), with links to Binance.
Of course, the week has been much focused on the Israeli war against Hamas (which has been pointed out using crypto for raising funds). Let’s note the Israeli initiative Crypto aid Israel to help rebuilding the south of Israel.
Also, the SBF trial has kept media busy. Although I do not intend to cover it, its worth noting that during her testimony, Caroline Ellison revealed that SBF bribed Chinese officials for $150m.
Much, mure more below, on M&As, on companies raising funds, and more…
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Business news
Business news
JP Morgan debuts tokenized BlackRock shares as collateral with Barclays.
First Abu Dhabi Bank completes cross-border payments testing on JP Morgan Onyx.
Business news: M&A
Bids for FTX 2.0 relaunch narrows down to 3 bidders. The stalking horse bid is to be determined on Oct.16.
Bitfinex owner, iFinex, offers a $150m shares buyback at $10 per share for 15 million shares (9% of total shares), valuing iFinex at $1.7b. Share owners are partly victims of the 2016 hack on Bitfinex, who had been offered BFX tokens to compensate, later redeemed for iFinex shares. iFinex directors will be allowed to participate, including Giancarlo Devasini, acting as CFO for both Bitfinex and Tether. Tether said that it is a distinct company from iFinex, though it has shareholders in common.
Business news: partnerships
Bitstamp says it’s in talks to help three large European banks begin offering crypto services around the first quarter of next year.
Business news: companies fundraising
Messari’s report “State of Crypto Fundraising Q3 2023” highlights interesting points, beside the well known drop in investments or concentration in early stage deals. It shows that chain infrastructure (especially smart contracts and scaling solutions) and DeFi are the highest funded sectors, while gaming leads all consumer application funding; it also points out a strong dominance of Binance Labs by deal count in general, as well as in DeFi and gaming sectors.
such as
Blockchain gaming sees $2.3b in investment in 2023, $600m in Q3.
Beside now bankrupt FTX, Forte, blockchain game platform was the largest fundraising in the crypto history. In 2023, Ledger, Paris-based hardware wallet company, is the largest fundraising (Series C was in 2 tranches: $385m in 2021 and $108m in 2023).
Closed deals
$20m for Membrane Labs, trading and lending platform, in a Series A round, with participation of Brevan Howard Digital, Point72 Ventures, Jane Street, Flow Traders, QCP Capital, Two Sigma Ventures, Electric Capital, Jump Crypto, QCP Capital, GSR Markets, Belvedere Trading, and Framework Ventures.
$15m for Alpaca, stock and crypto brokerage platform, in a strategic round with SBI Group.
$13.5m for Untangled Finance, London-based tokenised RWA marketplace. The round was led by Fasanara Capital. Fasanara also opened tow credit pools on the platform. Untangled currently runs on Celo, and plans to expand to Ethereum and Polygon via Chainlink’s CCIP.
$7.7m for Account Labs, Singaporean wallet provider, in a round led by investors including Amber Group, MixMarvel DAO Ventures, and Qiming Ventures. Account Labs launched UniPass Wallet, a self-custody wallet focused on peer-to-peer (P2P) stablecoin transfers using “account abstraction” to improve user experience.
$6m for RepubliK, web3 content creation platform, at a $75m valaution, with investors including OKX Ventures, HTX Ventures, 6thMan Ventures, Arcane Group, CMS, Comma3 Ventures, Enjin, FBG Capital, Mirana, OIG Group, Signum Capital, Sora Ventures and UOB Ventures.
$5.6m for MyShell, a web3 AI platform with user generated chatbots. The seed round was led by INCE Capital, with participation from Hashkey Capital, Folius Ventures, SevenX Ventures, OP Crypto and others, with a valuation of $57m. MyShell is offerings its features on Polygon, but is set to migrate to opBNB.
$5m for Virgo Group, an entity with trading and asset management services. Investors in the Series A round include Waterdrip Capital, Skylean Capital and Nextport China. VirgoCD is a Canadian crypto trading platform; VirgoCX in a crypto exchange available in Australia.
$5m for Game of Silks, fantasy horse racing startup, which allows consumers to buy NFTs and then earn rewards on horse racing. Investors have not been disclosed.
$4m for Parsec, analytics platform, in a round led by Galaxy Digital, with Uniswap Labs Ventures, Robot Ventures, CMT Digital and others participating.
$3.2m for Neutral, exchange platform for the environmental assets. The investment was led by North Island Ventures, with contributions from Redalpine, Digital Currency Group (DCG), Cerulean Ventures, Factor Capital, Very Early Ventures, and Rarestone Capital. Neutral also aims at creating liquid instruments for environmental assets similar to those found in traditional commodity and debt markets.
Business news: investment tools
Last week inflows reached $78m, the largest since July.
Amid ETH futures ETFs slow start, Proshare’s (EETH) seems to be dominating so far, despite Van Eck’s EFUT committment to donate 10% of profits to the Protocol Guild; third is Bitwise Ethereum Strategy (AETH).
The SEC had until Oct.13 to appeal on the court order to review decision on rejection of Grayscale Bitcoin Trust application as a Bitcoin Spot ETF. Up to now, it is not known whether they did, although this seems unlikely. They may try to differ their decision, but the deadline is coming closer. Bitwise sent an additional 40 pages pages of research to support their application as Bitcoin spot ETF. ARK Invest and 21Shares also amended their filing, which is a good sign for future approval.
WisdomTree adds 11 new states (to the existing 21) where its app gives access to digital funds, dollar and gold tokens as well as bitcoin and ether.
Business news: ecosystem funds and grants
Arbitrum’s voting on the first round of grants for its Short-Term Incentive Program (STIP) has officially concluded. A total of 29 projects (out of 100 applications) are set to collectively receive 49.6 million ARB tokens, valued at approximately $40 million, to further develop and incentivize the use of their applications on the Ethereum Layer 2 network. GMX is the largest grant recipient, with 12m ARB ($15m), Camelot garnered the most votes, while Lido Finance misses out. Perpetuals were the largest beneficiaries, with GMX, MUX Protocol, Vertex Protocol and Perennial. DEX were the second largest, with Camelot, Kyber Network, Trader Joe and Balancer. Lido critics are celebrating the rejected proposal and decrying the project for seeking to expand its already enormous staking dominance. The vote has been stained with Gauntlet unable to vote, although holding the seventh largest delegate position.
Web3 Foundation announces a program to kickstart projects in Polkadot ecosystem, allocating $40m to the endeavour.
Business news: people
Ripple loses CFO Campbell amid ditched acquisition of Fortress Trust.
21.co, subsidiary of Swiss 21Shares, hires Kevin Marsh, a TradFi veteran to lead its US business.
Tether appoints CTO Paolo Ardoino as CEO. Nothing is said why Jean-Louis van der Welde is stepping down.
Polkadot’s founder Parity Technologies plans to transition to decentralised teams, impacting staff.
Blocknative reduces headcount by third (from 36 to 24).
Crypto adoption
Bitcoin can be a critical economic tool for Cubans.
Korea’s crypto market cap soars 46% in S1 2023 (to $21.1b) compared to S2 2022.
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Business sectors
Mining
Despite hot summer, miners manage 13.88 exahashes jump (total world hashrate is just over 400 EH/S). Seven companies are particularly driving the increase, including Bitdeer, CleanSpark, Marathon Digital, Cipher, Bit Digital, Bitfarms and HIVE.
JP Morgan says Bitcoin mining industry is at a ‘crucible moment’, as the approval of a spot BTC exchange-traded-fund (ETF) could catalyze a rally against a backdrop of record hashrates and the impending block reward halving that threaten the industry's revenues and profitability. The bank initiates research coverage of CleanSpark (overweight), Marathon Digital (underweight), Riot Platforms (underweight) and Cipher Mining (neutral). The bank also upgraded Iris Energy (IREN) to overweight from neutral.
Chinese bitcoin mines in the US have sparked national security concerns over their proximity to critical US infrastructure, and their possible ties to the Chinese Communist Party.
Exchanges
Kaiko’s deep dive reveals concerning movement in Poloniex and HTX (ex-Huobi), with links to Binance. Altcoins volumes appear to be artificial, while $400m of USDT have been consistently sold for USDC, and then transferred to Binance, while HTX holds $400m of stUSDT.
Centralised exchanges clearly dominate perpetuals trading.
In the UK, to face new FCA regulation, Coinbase and OKX have partnered with Archax to get financial promotions approved, while Binance has partnered with Rebuilding Society. HTX and KuCoin have been placed on FCA warning list.
Binance
Binance introduces copy trading features for futures markets.
Binance’s Industry Recovery Initiative, big plan to rescue crypto, initially planned to $1b, has deployed less than $30m.
Coinbase
Other
Deribit to launch three altcoins options contracts (SOL, XRP and MATIC), plans to relocate headquarters to Dubai, and seeks to apply for a brokerage license in the EU.
Komainu, a crypto custody joint venture of Nomura, Ledger and CoinShares, has successfully registered with the U.K. Financial Conduct Authority.
Bitstamp to exit Canada starting January 2024.
DEX
Uniswap launches mobile Ethereum wallet on Android, after having launched on iOS.
THORswap resumes with updated terms to exclude users from sanctioned countries.
DeFi
DeFi TVL dropped from $163.5b in April 22 to today’s $36b, partly due to drop in DeFi yields vs growth of TradFi yields.
Diva, a ramping vampire attack on Lido.
Goldfinch writes down $7m of $20m Stratos loan, with the balance now sitting at $0.
Coinlist launches staking fund for institutional investors in the US, claiming it is a security.
TRM Labs report shows Tornado Cash usage dropped 90% following US sanctions.
NFTs
Umoja, an NFT collection to support orphans in Uganda.
Pudgy Penguins collabs with Last Crumb, a luxury cookie brand to drop a limited-edition.
MoMA has acquired Refik Anadol’s Unsupervised digital piece of art.
NFT Paris annouces the laucnh of its loyalty token $NFTPARIS.
Spencer Ventures bought 144 Pudgy Penguins for ‘mid six figures’ in Sotheby’s sale of 3AC bankruptcy auction.
Gaming
DappRadar publishes its report “State of blockchain gaming in Q3 2023” (by far main usage in Dapps, see graph below). It shows an increase of 12% in Q3 QoQ in DUAW (Daily Unique Active Wallets). Top games differ by UAW (top 2: Alien Worlds 527k, Sweat Economy 385k) or transactions (top 2: Axie Infinity $90m, Gods Unchained $55m). Top blockchains by transaction count are WAX (1.2b stable QoQ) and Solana (0.7b -42% QoQ); Scale and zkSync-Era are growing fast (although still small). Really well made and worth an eye.
Immutable has joined Amazon’s ISV (Independent Software Vendors) Accelerate Program, enabling the blockchain gaming company, known for its layer-2 scaling solution, to provide game studios with up to $100k in cloud service coverage
Onchain games engines to watch. Mud, Dojo, World Engine, Keystone
SAGE Labs, an interstellar game on Solana, from the Star Atlas team, made up 15% of all Solana activity on Sunday, surpassing Polygon’s total.
Rocket League players revolt over item trading ban. Do NFTs fix this?
Fashion
Metaverse
Decentraland Foundation releases its Q3 2023 quarterly update.
SocialFi
A review of 3 Social apps: Farcaster, friend.tech, Lens protocol, NEAR Social, CyberConnect.
Infrastructure
Wallets
Trezor launches new hardware wallets.
Payments
Metamask uses Stripe for fiat on-ramp for US users.
Security
London-based Quant launches Overledger Authorise to help banks and institutions managedigital asset and blockchain private keys with their existing enterprise key management systems.
Tokenisation
K33 Research considers LINK as the safest bet to benefit from the hype in RWA tokenisation, explaining that Chainlink is a key piece of infrastructure to connect blockchains with the outside world via its system of oracles.
Real World Assets
Advocating for RWA tokenisation in Hong-Kong (although advocating for the creation of a new public chain), based on four core elements: legal regulations, financial frameworks, technical support and data applications.
JP Morgan, Citi and Franklin Templeton are digitising traditional assets.
Stani Kulechov, Aave founder, invites companies building RWA products or tokenised treasuries to reach out the Aave DAO.
Marketing
Spindl claims to use blockchain database to help marketers understand web3 targets.
AI
DAO
‘Doxxing’ allegations surrounding Optimism grants attribution spark DAO debate.
FloorDAO sends $2.5m to fork activists.
Charities
Crypto aid Israel is an initiative to help rebuilding the south of Israel, families of the killed and captured, and families soldiers and first responders. In the first 48 hours, the initiative raised $100k. As of now, the alliance’s members include Fireblocks, MarketAcross, Collider Ventures, CryptoJungle, and the Israel Blockchain Association, with crypto custody platform Fireblocks responsible for managing these assets.
VitaDAO launched Matrix Biosciences with an initial seed of $300k, to develop treatments for cancer and aging-related diseases. Pfizer backed VitaDAO in a $4.1m round in January, holding vita governance tokens through a special purpose vehicle and participating in proposals.
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Markets, coins and tokens
Markets
Last week:
On-Chain remains extremely illiquid, while exchange activity remains significantly quiet.
Bitcoin Cash (BCH) sees biggest liquidity jump in Q3.
Oct.10:
Tezos’ XTZ jumped 7% on South Korean volume spike (seven times its monthly average) and hefty liquidations.
BTC and ETH options bid-ask ratio below 1, signalling a bias for volatility selling.
Analysts look to November as BTC looks to mirror past cycles.
Oct.11:
Why is the crypto market down today?
Oct.12:
Bitcoin faces elevated CPI.
Bitcoin’s resilience above $25k is a ‘silver lining’ in grim crypto market.
Oct.13:
Coinbase expert considers BTC Spot ETFs approval already priced in.
This week:
HODLers accumulate $1.35b in Bitcoin each month, tightening supply.
War and inflation chill crypto investments (BTC -3.7%, ETH -5.4%, DOT -8%, MATIC -8.6%, AVAX - 12.4%).
Bitcoin dominance increases:
Bitcoin
Compute anything on Bitcoin? BitVM is a new proposal, but devs are split.
No, McRib return won’t automatically cause BTC rise.
Ethereum
20 validators malfunctioned on Wednesday, and have been slashed from the network. They are associated with Launchnodes, one of Lido’s node operators. Lido faces minimum penalty of 20 ETH (around $30’000).
Ethereum gas fees hit new low for 2023. Supply inflation is at 0.44%.
ETH could reach $8’000 by end-2026, says Standard Chartered bank.
Inventory of Smart contrat AA wallet ERC-4337, Account Abstraction (technical)
Alt-coins, tokens and protocols
Polygon Labs proposed the ApeCoinDAO a dedicated Layer-2 network, “ApeChain”, using Polygon’s Chain Development Kit, and a $3.35m fund to boost the project.
Opinion: Leave Lido alone: concerns surrounding Lido’s dominance are valid, but we should be careful.
Layer2 Scroll appears to have launched its zkEVM on Ethereum mainnet on Oct.8.
Flare will burn 2.1b FLR to support ecosystem health.
zkSync-Era open-sources its block explorer and portal (bridge).
Woo repurchases shares and tokens from 3AC, for $4.4m (25m WOO).
TON ecosystem overview.
Stablecoins
Tangible’s USDR crashes to $0.51. The stablecoin is mainly backed by rental real estate in the UK.
Frax Finance Fed yield matching staking vault attracts $30m in one day.
Circle’s silver lining: unpacking USDC’s supply drop.
CBDCs
The central bank of Nigeria denies that eNaira could threaten Nigeria’s financial stability, as wrongly interpreted from a CBN report by a local newspaper.
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Opinions, regulations, sanctions and scam
Opinions
If you are working in crypto, you need to engage with the case against crypto. It might be disturbing…
Regulations
Why some crypto firms are suspending services in the UK. How new FCA rules may be tough to implement on a global basis. Some did, like OKX; other are experiencing problems such as Binance with its partner Rebuildingsociety, hit with an FCA restriction.
G20 finance ministers embrace roadmap for crypto asset regulation.
The European Securities and Markets Authority published a report categorising smart contracts (in five categories: Financial, Operational, Tokens, Wallet and Infrastructure), highlighting the regulator's primary concerns regarding DeFi innovations, stressing that developer pseudonymity can enable a proliferation of illicit smart contracts and pointing out that the composability of smart contracts could amplify system faults and lead to increased contagion risk. The report is the result of a deep analysis on smart contracts data over time.
French regulator sees DeFi as "‘disintermediated’, not ‘decentralised’.
Sanctions and trials
Grocery chain Trader Joe’s sues Trader Joe, the DEX, again.
BarnBridge DAO votes to comply with undisclosed SEC order.
Bankrupt companies
Court approves Genesis settlement of $175m to FTX, while FTX creditors wanted to contest it. The settlement expunges billions in claims.
Voyage Digital ex-CEO, Steve Ehrlich, charged by US regulators with fraud. A settlement with the companies was reached, which permanently bans the companies from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets. The companies also agreed to a judgment of $1.65 billion, which will be suspended to permit Voyager to return its remaining assets to consumers in the bankruptcy proceedings.However, Steve Ehrlich has not agreed to a settlement.
In a court filing, Terraform Labs blames Citadel Securities for having causes Terra’s crumble.
FTX and SBF
During its testimony, Caroline Ellison revealed that SBF bribed Chinese officials for $150m, using identities linked to Thai sex workers, in a move to unfreeze $1b funds locked by authorities.
One of the nuggets from Ellison’s testimony that hasn’t received much attention among the more lurid revelations concerns Bankman-Fried’s view of financial regulators, aiming at enforcing regulation against its main competitor Binance, allegedly tied to China.
Scam and scam fighting
How Hamas is using crypto to raise funds. Digital currency transactions highlight how U.S. and Israel have struggled to sever the access of Hamas, Palestinian Islamic Jihad and Hezbollah to foreign funding. With the help of Binance, Israeli police froze Hamas-related accounts. Indeed, crypto is much more transparent than other means, and one shouldn’t blame crypto for what happen, but rather blame Hamas (and Iran).
Platypus suffers second flash loan attack in 9 months. Certik estimates the losses to $2.2m.
HTX hacker returns 5’000 ETH hacked funds, keeping a “whitehat bonus” of 250 ETH ($400k).
Stars Arena recovers $2.2m (90%) of stolen assets. The recovery was negotiated with the hacker in exchange for a 10% bug bounty. The platform says it will restart.
Galxe announces $396k refund to affected users following DNS attack.
Upbit says it deflected 879 hacking attempts on daily average this year.
Inside FTX all-night race to stop a $1b heist (on Nov.11). Where it appears that a consultant offered his hardware wallet to temporarily save $400m. A ‘Wired’ investigation.
Russian attackers may have been behind FTX hack.