Each week, Conor Svensson, founder and CEO of Web3 Labs, provides a rundown of the major events that took place in the blockchain industry during the past week. We cover #crypto, #enterprise, #DeFI and #NFTs.
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Hi, I'm Conor Svensson, Founder and CEO of Web3 Labs and this is your Week in Blockchain on Monday the 26th of April 2021. The leaders this week include the launch of a new CBDC task force in the UK, bumper yields are being predicted for Ether, Richemont, the owner of Cartier and other luxury brands are getting more involved in blockchain, Facebook's Diem may be launching later this year, there's been another DeFi hack, IBM are finally making some noise about NFTs and Enjin's JumpNet NFT platform launches. The Bank of England and HM Treasury in the UK have launched a new task force to explore digital currency. They're looking at central bank digital currencies which would enable a new form of digital money to be issued by the Bank of England for use by households and businesses. This would work alongside existing cash and bank deposits rather than replacing them. The government and Bank of England have not yet made a decision on whether or not they're going to introduce this, but what they've done is engage widely with stakeholders on the benefits, risks and practicalities of doing so. The task force plans to ensure strategic approaches adopted between the UK authorities in exploring CBDC's and it will require close coordination among a number of different actors. The overall goal of this is to coordinate and explore the objectives, use cases and opportunities presented by CBDC's to guide the evaluation and design features that must be included to support the goals, support rigorous coherence and comprehensive assessment of the actual use cases for CBDC, monitor the international developments and to ensure that the UK remains at the forefront for global innovation. This was a huge piece of news when it came out this week simply because the UK is a very significant economy and very involved in the FinTech space and being one of the global financial centers. The ramifications of this are very significant so it's really positive news to see that the authorities are looking at the technology very seriously. Related to this, PWC launched their CBDC Global Index, the first edition, in the last week and the idea is that it's a report to measure a central bank's level of maturity in deploying their own digital currency. They've created an index that captures the central bank's progress, their stance on CBDC development and the public interest in a couple of use cases. The first of which is retail which is where CBDC currencies are held directly by citizens and corporates and then the other is interbank or wholesale which is where payments using CBDC's are controlled by financial institutions so they're used for payments but also financial settlements as well. Within the report itself they outline the traction by different countries for retail applications and wholesale but it's a really interesting report to go a bit deeper in terms of where we are currently in the landscape. In China, one of the regulators has said that Bitcoin should be classified as an alternative investment. This is something that came out on Twitter where Li Bo, a deputy governor of the People's Bank of China, the country's central bank, said that Bitcoin and stable coins are alternative investments in the eyes of the law. This is interesting because it's them saying that it's not to be treated as a currency but it's still to be treated as an alternative investment so there's that level of speculation that's included in this view. We've also seen Ether, the cryptocurrency, reach a new record high this week topping $2600. The reasons perceived for this is that the market anticipates there is going to be a supply drop of the Ether cryptocurrency that powers the Ethereum network when the EIP1559 upgrade comes live. We've spoken about this previously. In effect what's going to start happening with the fork that's currently planned in July is the Ethereum miners fees will reduce. The Ethereum network will burn some of the Ether that gets used in transactions and this will ultimately drive down the price for users of the platform and create a fairer more equitable environment for people transacting with it. But, there's been a bit of controversy because some of the miners aren't so happy with this, but right now it looks like it's going to go ahead as planned. The good thing here is that it brings down transaction prices but also it seems that it increases the actual value for those people who actually hold Ether already so it's perceived that there are quite a few positive benefits. Something else that also came out, was a tweet by Justin Drake, one of the ETH2 researchers, who's played out some models talking about how the Ether price could be affected by what's being called 'the merge', which is when the current power hungry Ethereum proof-of-work network merges with the new ETH2 proof of stake network, which hopefully may happen later this year. The anticipation is that staking fees for those who are already staking Ether could go up as high as 25 APR by his conservative estimates so again, this is another area which has drawn in a lot of interest. That being said, against this background of all-time highs we've also seen a big market sell-off in the last couple of days with Ether dropping down to below $2200 and Bitcoin going below 50k for the first time in a while. IBC have released a new report and they estimate that global spending on blockchain solutions will reach $19 billion by 2024. This is compared to an estimate that was a $6.6 billion in 2021 and with a compound annual growth rate of 48%. One of the fascinating things in this guide is that it talks about which industries they see the the most traction happening in blockchain too. Banking is very much at the forefront which accounts for 30% of the worldwide total of spending estimated in 2021 and they anticipate that will remain the case. The primary use cases being seen according to their reports are cross border payments and trade finance and then apparently next up is manufacturing with 20% of the spending with lineage and provenance being the main use cases there. They do anticipate that there's going to be significant growth in other sectors and government healthcare and professional services is where we'll see the most impact. Moving on to crypto specific news, Venmo, the widely used payments platform owned by PayPal, is now accepting crypto so there's 70 million customers that can buy to sell and hold a cryptocurrency using the Venmo app. Initially, it's only supporting Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Again, it's an indication of the popularity of cryptocurrencies and companies wanting to offer these to consumers based on demand. We've also seen 3 Ether ETFs begin trading on the Toronto stock exchange. Three firms producing these received the green light from the Ontario Securities Commission last week. This move follows shortly after the same regulator approved Bitcoin ETFs earlier on this year so although this hasn't happened in the US market yet the fact is happening in Canada which is a very positive sign. Time magazine have announced that they'll accept crypto for the digital subscriptions. This is something that we've brought up in previous editions, how Time magazine's getting involved more in the crypto space with accepting payments and now they've paired up with crypto.com who provide the the crypto app and people can pay using crypto to provide 18 months of access to unlimited content on their site. WeWork have just have announced that they're getting into the crypto space and willl start accepting crypto for payments and will add the funds directly to their balance sheet rather than trade them out into a fiat currency which is often what happens with a number of companies. The German telecoms company Deutsche Telekom has announced that it's bought a number of Celo coins for the Celo blockchain platform. The purchase was made through their innovation pool and although they haven't commented specifically on the purchase as such, it's very positive to see the large corporates getting involved in the fundamental crypto economics associated with this project by investing in the coins. What Celo provides is a blockchain platform that's really focused on developing world applications with those individuals who don't have access to things like banking and so on. They provide a pegged stablecoin but also they run a blockchain network. Again, positive news to see this institutional interest. Also in the UK, the 110 year old asset manager Baillie Gifford has invested $100 million in blockchain.com. They're one of the UK's most prominent asset managers and they have 445 assets under management. Another piece of UK centric news, the major UK bank Natwest announced that they wouldn't be serving businesses that are dealing in crypto and this was via The Guardian newspaper but then afterwards they came back and said it wasn't the case. I think more and more generally when you hear that HSBC has been taking quite a conservative approach towards crypto and then also hearing Natwest doing a similar thing, there's a bit of a contrast here with what some of the UK banks are saying compared with the American banks for instance such as Morgan Stanley, Goldman's and of course JP Morgan, who are really sort of diving in to the asset class. Then the Cartier owner, Richemont which is the second largest largest luxury conglomerate in the world, have spoken about how they worked with NFTs on an Ethereum-based platform partnering with Arianee for Vacheron Constantin luxury watches. They made use of an Ethereum platform for this because they wanted to target consumers and provide transparency hence it made sense for them to work with the public Ethereum network. Also, Prada and Cartier have joined the LVMH Aura Blockchain Consortium which is focused on addressing counterfeits. It was launched by Microsoft and ConsenSys in 2019 and consumers can can view details of the authenticity of an LVMH product by scanning a QR code that's on the label via an app which then provides the full story about the item covering things like the raw materials that were used, all the way through to manufacturing and production. It's also got information about product care and warranties but it's great to see that there's more traction occurring with this very valid use case of the technology. There's also been news about the Facebook backed Diem project planning to launch a digital currency pilot later this year. The intent is that will be a stable coin that's paid to the US dollar. The association Diem, formerly called Libra, is based out of Switzerland and they're in talks with the Swiss regulator about securing a payment license. Details aren't public yet but apparently it's going to be small scale and focus on transactions between consumers. Also the Swiss exchange SDX, the six digital exchange, has joined the Enterprise Ethereum Alliance. This was interesting news because they had previously spoken a lot about their work with Corda but now they're also looking to extend how they're using these blockchain platforms simply because of the amount of traction that you're seeing on Ethereum for digital assets in the world of public protocols. Cardana and Polkadot have really started to establish themselves according to a report that came out on the website Staking Rewards. Cardano's currently the top blockchain in terms of staked value with roughly $26.4 billion of Cardano's ADA token allocated to securing the network and then Polkadot is coming in second with about $22.7 billion worth of their DOT token locked which is about 64% of their circulating supply. Between the two of them they currently represent 7.9% of $620.6 billion in crypto assets that's designated for staking across the overall space. Ethereum is currently the fourth largest asset class with $8.2 billion staked however, we're likely to see this number significantly grow as the cut over to the ETH2 network becomes nearer. Also in the Polkadot news there's a number of new offerings that are set to hit the market in the next month or so with a view to taking on some of the activity that's happening across Ethereum and Binance Smart Chain and so these include the Acala Network which is a DeFi hub on Polkadot, Moonbeam which is a new smart contract platform and also Clover which is another platform for running applications on top of it. Again, there's been a lot of pushes towards growing the ecosystem there so it'll be fascinating to see how Polkadot grows over the coming months and years. In DeFi news, the decentralized exchange UniSwap has hit a record $10 billion in weekly trading volume which is a 26% increase over the last seven days. However, the competitor Pancake Swap's volumes are more than double UniSwap currently. UniSwap though is also in preparation for its big V3 go live, which we discussed here previously, due to happen on May the 5th. They've started deploying their contracts for this upgrade to the Ethereum testnet to do the testing and preparation for this. One of the projects that we've mentioned previously, Cream Finance, have put up a $1.5 million bug bounty to improve DeFi security. Back in February, we discussed how they lost $24 million from hackers due to a bug in one of their smart contracts. The DeFi protocol EasyFi has reported a hack and lost over $80 million in funds. The blog post from their their CEO and Founder said that the hacker had transferred out almost 3 million tokens which were worth $25 a piece at the time, which came to a total of around $80 million. Apparently the hacker managed to get hold of the private key for one of their wallets rather than doing it via a different mechanism such as exploiting a bug and a smart contract. Again, it's just testament to the different attack vectors that people need to be very across when they're running these projects. In the NFT world, JumpNet, Enjin's new gas-free blockchain, has got over 50 projects within its first two weeks of launch. Enjin have been involved in the blockchain space for a while and they are actually co-creators of the RC1155 token standard, which is a token standard that enables you to have a contract that manages both fungible and non-fungible tokens using the same contract, so it provides a lot more flexibility than just saying we're going to go with ERC20 which are fungible tokens and ERC721 which are non-fungible. What they've done is spun up an Ethereum compatible blockchain which doesn't have gas fees and they've been able to get significant traction with that. They've got companies who've already started using it which include Microsoft, Binance, OKEx, BlockDown, MyMetaverse and MetaverseMe. This will be definitely a platform to watch! The patent market platform IPwe has partnered with IBM to launch NFT patents. The patent records will be stored using IBM's blockchain technology. I think the interesting thing about this piece of news is that there hasn't really been a lot coming out from IBM in the space of NFTs and so although this is just an announcement at this point in time, it shows that potentially there is some interest in companies trying to build some applications on top of IBM's blockchain technology. Also, the Bitcoin based NFT game Infinite Fleet has raised $7.2 million so far. This is a PC game that's focused on collectible spaceships that players can purchase, sell and use within the game. In terms of the metrics this week, we've seen the crypto market cap is down 6.6% to $1.82 trillion, the assets locked in DeFi are down 12% to $52.9 billion and then the NFT sales are down roughly just over 22%, we've seen over 25000 sales with an average price of just over $1300. That's all we have for this week, if you like what you hear please subscribe to our podcast and our YouTube channel. Links to all items discussed will be available in the show notes and on our website, weekinblockchain.com. We also host a weekly Clubhouse session every Monday at 12 p.m eastern and 5 p.m UK time if you'd like to discuss any of the items we've covered here. Thanks and I'll see you next week.