This Week in Blockchain on 1st March 2021

Hi, I'm Conor Svensson, founder and ceo of Web3 labs and this is your Week in Blockchain on Monday the 1st of March 2021. Coinbase's IPO gets ever closer and this week they released their S1 filing in preparation for this event. The S1 form is the standard form submitted to the SEC regulator by a company to register their securities. There's a lot of interesting data points in their S1 form. Some of the highlights include that it shows that they made a $322 million profit last year, that Bitcoin and Ether make up over 56% of the total trading volume on the platform and that volume got to $193 billion last year and at the end of last year the total value of crypto assets on their platform represented 11.1% of the total market capitalization of all crypto assets. The breakdown of those assets between Bitcoin, Ethereum and other assets was 70%, 13% and 13% and then the remainder being just fiat currencies that people held in their trading account. The other interesting thing with the paper was that it outlined some of what were perceived as the risks to their business as well. One of these was that if the identification of Satoshi Nakamoto, creator of Bitcoin, emerged that it could significantly affect the price of Bitcoin. Other concerns raised include the Ethereum2.0 network launch timeline and also network congestion on the Ethereum network too, which we'll be talking about a bit more later. With other corporates there was the announcement by Square that they had bought $170 million more Bitcoin in addition to the $100 million they purchased last year and then MicroStrategy as well they bought another $1 billion of Bitcoin taking their market cap to over $7.84 billion over half of which is now in Bitcoin. Tether and Bitfinex- Tether the stable coin and Bitfinex an exchange operator had to pay a fine of $18.5 million to the New York Attorney General's office and are actually banned from operating in New York. This goes back to something that happened in 2018 where they worked together to conceal a loss of$850 million. Bitfinex made a full statement about it. Bitfinex had made a loan to a payment processor of $850 million and had liquidity issues they then borrowed $600 million from Tether who is their sister company but this information was not made public which is why this whole legal event happened. In terms of other enterprise news Bosch have announced that they're going to be working with Fetch.ai on launching a blockchain network to support their economy of things this month. So Bosch's economy of things makes up a core part of their longer term business strategy where you basically have these decentralized networks which are made up of autonomous economic agents as they call them which combines technologies like AI and 5G to support hyper connectivity of devices and this is very relevant in the mobility sectors, I think you know smart cities and linking together cars and buildings and so on and so forth. HSBC as well made an announcement that they've started running their R3 infrastructure on Google Cloud and this ultimately is to decrease onboarding times for their digital blockchain platform that they've been running since 2019. The digital vault platform basically digitizes transaction records of private placement assets including equity debt and real estate and it enables global customer custody clients to access details of the private assets in real time instead of having to request these documents manually. The key thing though with this migration to Google Cloud is that it enables them to onboard new participants on the network in weeks instead of months and this is a classic problem that you see a lot of the time in enterprises in that they are not able to easily hook up to other enterprises infrastructure. So when you use a platform that's slightly more dynamic such as Google Cloud or one of the other cloud providers provides a bit more dynamicism and flexibility here. There's also the announcements of the Baseledger protocol being launched by Provide and Unibright. This is basically a network to support the Baseline Protocol. The Baseline Protocol is really a middleware for messaging that sits on top of the Ethereum mainnet. However, because of the high cost for transaction fees on the Ethereum mainnet they've started to think about other ways in which they can address this issue and so they're looking at launching this dedicated network to do this. And this brings us back to the transaction fee and scaling issues for Ethereum. In the Ethereum landscape one of the things that's getting a lot of air time at the moment is what's called EIP 1559 and this is about reducing the transaction fees on the Ethereum network for miners so that they end up being paid a more consistent transaction fee. For the perspective of users what this means is that users won't have so much variability in the fees, yes the fees are currently expensive and they would stay expensive, but it would mean that the end users at least would know what they're likely to have to pay to actually get a transaction through the network. The issue with this change which is EIP stands for Ethereum Improvement Proposal is that it doesn't have all of the support of the community. Lots of developers support it but there's miners that don't. One of the big miners called Sparkpool, who has 24 of the network hash rate which basically means that they contribute to 24 of the transactions and blocks that get added to the Ethereum network, they're not supportive of it and so not getting them over the line is is a slight issue for the community. At present this doesn't though as I say solve the scalability problem which is where layer two technologies come in and so there's been a lot of activity in the layer two scaling technologies in in the in the past few months because these will address the congestion of the public Ethereum network and things are really starting to heat up. One of the things that was announced this week was that the VC firm Andreessen Horowitz had invested $25 million in the Optimism network last November. Now what's interesting about the Optimism network is it was formerly known as the Plasma network. The plasma network has its roots in a white paper that was written by Vitalik Buterin and Joseph Poon back in 2017. Having this big name VC but also it being focused on a scaling solution that was proposed some time ago and has had a lot of thought gone into it, I think it certainly shows that this this could emerge as one of the more dominant scaling solutions on the Ethereum platform to help address the transaction issues. It'll be fascinating to see how this evolves. The implication of these issues with scaling on the Ethereum network has resulted in some protocols actually announcing that they're going to work with other protocols instead. Now we spoke about this last week with what had happened with a PancakeSwap emerging and taking on UniSwap by it running on top of Binance's side chain which is Ethereum compatible called Binance Smart Chain, this week the 1inch decentralized exchange aggregator said that they were going to start supporting Binance Smart Chain as well so that people had a choice of which network they wanted to run on, Ethereum or Binance Smart Chain in order to access. In order to actually trade through the platform the interesting thing that about Binance Smart Chain versus Ethereum is that although BSC is a public network, it only has 21 validator nodes running at any one time which means it can scale a lot more. The DeFi publisher, The Defiance, put out a report which really dives a lot deeper into this and this comparing the BSC and public Ethereum network so I encourage you to have a read of that if you really want to get across some of the numbers. Other interesting news also comes from Cardano, which is back to being the third largest blockchain by its token market capitalization after Binance coin briefly dislodged it from that third spot last week. It's announced Babel Fees, which is basically payment of transactions for fees on the network using user-defined tokens in Cardano, so that's an interesting innovation insofar as on the Ethereum network that you need to use the Ether cryptocurrency to pay for transaction fees on the network, even if those transaction fees are to pay for the transfer of a token say from one person to another. In Cardano what they've basically done here is they've said that you can create a token on Cardano and then you can also pay your transaction fees on Cardano using that token so in effect the tokens are first class citizen. It'll be very interesting to see how this evolves over the coming months with that platform. In the world of NFTs things have continued to hot up especially in the art world with the first ever NFT artwork being auctioned by Christie's going on sale. The piece called Everydays: The first 5000 days by Beeple and is currently at $3 million and has an another week or two left to run. However, the same artist, Beeple, also sold another piece of art called Crossroads on Nifty Gateway which is an online crypto marketplace for digital art and this went for over six million dollars so it'll be fascinating to see where the piece on Christie's gets to. Damien Hurst, the famous british artist, doesn't want to be left out here though and he's also announced that he's going to be accepting for the first time ever Bitcoin and Ether for a set of cherry blossom prints he's created. These will be three thousand dollars each and the number of prints will be dictated by the number of orders that are taken over the next week. And then finally back to NBA Top Shots which we've spoken about in the last couple of weeks. The NBA collectible highlights known as "Moments" they've generated over $205 million in sales since going live in less than six months ago with nearly 65% of that processed in the last week. In terms of the crypto market it took a bit of a beating this week and it's down over 22% down to $1.36 trillion and the assets locked in DeFi as well they're down 17% over almost 18% down to $35.23 billion. That's all we have for this week, if you like what you hear please subscribe to our podcast and also the Web3 Labs page. On YouTube links to all items are in the show notes and on our website www.weekinblockchain.com. We also host a weekly Clubhouse room at 12 p.m ET/ 5 p.m GMT where we'll be discussing all of these news items so I encourage you to come along if you want to have a chat thanks and I'll see you next week.