This Week in Blockchain on 15th March 2021

I'm Conor Svensson, founder and CEO of Web3 Labs and this is your Week in Blockchain on Monday the 15th of March 2021. This week an NFT by the artist Beeple, listed by Christie's, sold for $69 million to a person known as Metakovan, who is the founder of the Metapurse NFT fund. Justin Sun the founder of the Tron blockchain did not win the auction despite bidding $60 million just as the clock wound down. Metapurse is the largest NFT fund in the world. The founder, Metakovan, actually spent $2.2 million back in December to acquire 20 single edition Beeple works so they already have a lot of experience with respect to investing in these works. Off the back of the Beeple works that they bought in December they actually released a NFT token where you could get exposure to that. In a discussion earlier this week with investor and crypto commentator Anthony "Pomp" Pompliano, the artist Beeple mentioned how NFTs have the potential to become part of the art market like Bitcoin did for the financial markets. With this in mind, where we are right now is capturing just a tiny fraction of what is possible. So certainly from Beeple's perspective, he believes that if NFTs continue to take off, we could see a lot more growth here. The artist Damien Hirst, off the back of this, has announced plans for a NFT sale later this year. Bitcoin reached the new all-time high breaking the $61,000 threshold. JP Morgan have launched the crypto exposure basket which includes a number of firms that are invested in crypto and also cryptocurrency miners and producers of hardware for cryptocurrencies. Some of the notable companies include MicroStrategy and Square which have loaded up on Bitcoin in recent months, Riot which is the NASDAQ listed Bitcoin miner, Nvidia, the graphics card maker, whose graphics cards are used for a lot of mining on Ethereum and other blockchain networks and also Paypal. One notable exception though is Tesla was missing from it, which is somewhat surprising given how significant a position they took in Bitcoin earlier this year. Microsoft recently announced that it will launch a public preview of its Azure Active Directory verifiable credentials shortly. You can think of this like a digital wallet similar to Apple Pay or Google Pay but it's for your identifiers rather than credit cards. The intent here is that you can take things like university transcripts or professional credentials and add them to this wallet. Then you can use the wallet to show that you have these credentials without having to provide lots of background about who you are. Microsoft are already testing this with a number of parties including Keio University in Tokyo, the government of Flanders in Belgium and here in the UK with the National Health Service. The great advantage of these decentralized identifiers is that you don't need to send all the historical information about a person in order for it to be verified. So just by having this credential you can trust it, which is very powerful. Microsoft has been working on this since 2017 and has slowly built the infrastructure up during the past few years. The system is based on the Bitcoin protocol and uses something called Sidetree on top of it where they store the records of transactions to the blockchain. Meitu, a Chinese photo retouching app listed in Hong Kong, has announced the purchase of $40 million of Bitcoin and Ether. It's one of the most popular mobile apps in China which has nearly 300 million monthly active users as of midway through last year. They're also evaluating the feasibility of launching an Ethereum based decentralized application so it's another significant piece of news in the D'App space. The graphics card producer Nvidia attempted to stop cryptocurrency miners using their gaming graphics cards for mining. Their strategy had been to to split the cards they offered so you had ones that were dedicated for cryptocurrency miners and then other ones that were dedicated for gamers. Unfortunately, the crypto miners have found a way to take the regular gaming graphics cards and use them for cryptocurrency mining so we'll have to see how they manage to get on with this battle to prevent it from happening again. On to scaling technologies, something that's come up again and again is how congested the Ethereum network is with respect to its ability to process large numbers of transactions. This has ramifications for the trading of different tokens, when people invest in specific blockchain protocols but also in NFT markets as well. One of the things that has been announced this week is by the protocol Maker DAO who produce one of the leading stable coins on the Ethereum network. They've announced what is called the Optimism Dai Bridge with fast withdrawals. Optimism is a platform that we covered recently, which is one of the leading scaling solutions for Ethereum that's coming out shortly. One of the challenges you have with networks that use the technology called rollups, which is what optimum uses, is that when you transfer an asset onto the network it's instant but then transferring it back off takes up to a week to give time for cryptographic fraud proofs. What Maker DAO propose here is to work around this so you don't have that seven day lock up period. What they want to do is have a token that is used as a claim by people who are using this scaling protocol and then when you come off it you basically stake this token in order to get a new token. When the seven day window has passed the position is unwound which gets around the scaling challenges. Scaling of Ethereum being the hot topic it is, it also came up on Tim Ferriss's very influential podcast this week with Naval Ravikants the co-founder of the Angel List platform, who's very prolific in Silicon Valley and also in the crypto space. They interviewed Vitalik Buterin and he was talking about the potential for these technologies to scale the Ethereum blockchain up to 100 000 transactions per second. It's very notable Vitalik appearing on such a mainstream podcast as Tim Ferriss's show, simply because it's a sign of wider interest beyond the tech circles around this technology. Another interesting development that's happening with respect to protocols is that the Nu Cypher and Keep protocols have announced that they're going to be merging on top of Ethereum. The fascinating thing here is that there's lots of different protocols that provide certain value-added services on top of the blockchain. In the case of the Keep network they provide a protocol for privately storing data offline and the Nu Cypher protocol provide what's called a proxy re-encryption scheme, which basically enables someone who owns some data to delegate decryption rights to someone else. These projects each have their own tokens but by merging the two protocols together what they're going to do is be able to create a new organization that both teams work on which uses the existing tokens for governance that enables them to come together as companies. In the world of blockchains and decentralized organizations this is very significant just because it's one of the first high-profile announcement of protocols merging. I'm sure we're going to start seeing more over the coming years as well. In the DeFi markets, Uniswap's token UNI has surged 50% in one week becoming the first DeFi D'App token to make it into the top 10 of the largest cryptos by market capitalization. One of the fascinating things about the UNI token was that it was air dropped to the users of the Uniswap decentralized exchange platform back in September so everyone who'd ever used the platform received 400 tokens. Back then it was trading at $4 so you're talking about sixteen hundred dollars worth of tokens just for having used the platform. Now it's trading at over $30 so anyone who's used the platform and kept the tokens has profited heavily from this. The other interesting development is that one of the rival decentralized exchanges called SushiSwap has overtaken Uniswap this week in terms of the number of assets locked in DeFi. Sushiswap's token is nothing like as high as the market capitalization as Uniswap's token is however, it was the emergence of SushiSwap that pushed Uniswap into creating their token in the first place. Again it'll be fascinating to see how it evolves. A protocol called Degenerative Finance have launched a token that tracks the top 10 WallStreetBets stocks. This token is structured like a derivative contract in that it expires in April. At expiry time, people who have invested in the token will receive the value of those WallStreetBets stocks that are in the portfolio in stable coin USDC. Again, what we're seeing here is financial decentralized financial innovation starting to overflow into the real world in that you can have this decentralized futures contract that tracks the price of some existing assets in the regular financial market. It's another fascinating innovation to track. In less than a week, the Big Data Protocol emerged and amassed $6 billion of assets locked in on the platform, making it the third largest protocol by total assets locked according to the DeFi wallet provider DeBank. Then, back into the world of NFTs, there's been more people getting in on the NFT act with actor Lindsay Lohan listing her first non-fungible token. Taco Bell launched and sold out a collection of taco themed NFTs that had Taco Bell's NFT taco art which was artwork inspired by their tacos but at a reasonable price. All proceeds from this sale went to the Taco Bell Foundation. Also, we mentioned previously Jack Dorsey with his first ever tweet being listed for sale as a NFT. This this is still hovering at $2.5 million and the auction ends in a week's time. He said that he's going to be donating all proceeds of this sale to an African relief charity. And finally, the influential artist platform called Art Station has scaled back its ambitions with respect to NFTs because of some pushback on environmental backlash, due to concerns about cryptocurrency mining and its effects on the platform. However, there are other options out there such as Dapper Labs platform. As the Dapper Labs platform CEO Roham Gharegozlou stated, the blocks on public blockchains are still going to be mined so it doesn't really matter either way whether or not you're creating NFTs, which is certainly one valid argument that you can have here. In terms of the metrics, the crypto market cap is up 16% this week to a total of $1.8 trillion, let's see if it gets to$2 trillion anytime soon. The assets locked in DeFi are up almost 17% to $46 billion and NFT volumes have remained roughly the same but the average price is up over almost 50% to $1500 which again may be the Beeple effect but it will be fun to see where it is next week. That's all we have for this week, if you like what you hear please subscribe to our podcast and our YouTube channel. The podcast is at weekinblockchain.com and you can get to our YouTube channel via watch.weekinblockchain.com. Links to all items discussed are available in the show notes and on our website. We're also hosting a weekly clubhouse room every Monday at 12 p.m eastern 5 pm GMT if you'd like to discuss any of the items we've covered here. Thanks and I'll see you next week.