Each week, Conor Svensson, founder and CEO of Web3 Labs, provides a rundown of the major events that took place in the blockchain industry.
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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 3rd of May 2021. The highlights this week include Tesla selling some of their Bitcoin, the Ethereum community helping the Covid fight in India, the European Investment Bank planning to issue a blockchain bond, Alchemy have closed another round of funding bringing them closer to their vision of being the AWS for blockchain, Turkey, South Korea and India clamping down on crypto, the Aave V2 launch, Metamask wallet exceeding 5 million active users plus what Dapper Labs plan to do next following their success with NBA Top Shots and ConsenSys's Decentraland headquarters. In Q1 of 2021, Tesla invested 1.5 billion in Bitcoin then trimmed their position by 10%. The company's CFO and the 'master of coin' Zach Kirkhorn announced it earlier this week on an earnings call that sale made $101 million positive impact to the company's profitability in the first quarter. The company does believe in the longevity of Bitcoin and they see it as an important financial tool to access cash quickly but the reason apparently for the sale was they also wanted to check their thesis that they could actually shift Bitcoin quickly if need be. Despite all of this, Elon Musk has said he's still hodling onto all of his crypto investments. The Ethereum community have donated over $1.7 million in Ethereum's cryptocurrency, Ether, and ERC20 tokens towards India's coronavirus fight. The Ethereum co-founder of Vitalik Buterin donated over $640 thousand dollars worth of Ethereum and Maker, the stablecoin, towards a crypto focused relief fund to help the coronavirus situation in India. Individuals in the local crypto industry as well have taken notice and they're uniting others to get involved with this cause. Sandeep Nailwal, the Delhi based co-founder of layer 2 scaling technology Polygon, said that he would manage and run a covid relief campaign to help the underprivileged in the country. The Binance crypto exchange has announced that it's going to offer tokenized stocks of Apple, Microsoft and Microstrategy so these tokenized stocks are equivalent to stable coins on the platform. They're pegged to certain underlying assets and move with their prices. Each token stock listed on Binance will represent an ordinary share of the relevant stocks they're fully backed by the real shares and this is managed by a German financial services company called CM-Equity AG therefore the holders of these tokenized stocks will also be fully eligible for returns on the underlying shares including the dividends. On the regulation side, Turkey has announced they plan to roll out regulations in the next couple of weeks. What they want to do is create a central bank for cryptocurrency custody after two prominent exchanges locked customers out in the last week. According to reports from Bloomberg, authorities may also require exchanges to keep a certain amount of cash on hand and introduce credential requirements for exchange executives. This is in order to reduce the overall risk for investors when exchanges can't meet their obligations. We've seen in Turkey, the Bitcoin exchange Thodex suddenly stopped trading and prevented customers from making withdrawals. Some thought that this was fraud but apparently the CEO of the exchange said it was due to cyber attacks. However, the government did detain company staff and seize computers, froze bank accounts and so on in order to actually get to the bottom of what went wrong. Not long after this point one of the rival exchanges called Vebitcoin also stopped trading and locked users out claiming intense transactions put the company in a financially difficult position. This combination of factors led the Turkish government to step in and start planning to take a lot more active action with regards to the crypto trading. In India we've spoken previously about how the government there is planning to clamp down on crypto holdings and there's speculation that there may be an exit window. In the case of a Bitcoin ban it gives people the opportunity to actually get rid of their Bitcoin and sell them before the actual ban comes into effect. The Norwegian central bank has started testing digital currency solutions. So the Norges bank in Norway has announced they're working with the group for central bank digital currencies. What's interesting about this is that Norway believes it has one of the lowest usages of cash in the world and it's been exploring CBDC's for a number of years so it's very well positioned to spur this next phase of research here. Also in China, some banks have started promoting CBDC's over local payment firms for an upcoming shopping festival. Some of the largest state banks in China are actively promoting the Digital Yuan as a superior means of payments as opposed to the country's two leading payment providers Alipay and Wechat pay. Apparently six of China's largest banks have been promoting this from a report in Reuters this week. JP Morgan have also announced that they're going to be offering an actively managed Bitcoin fund to certain clients becoming the largest bank to embrace crypto as an asset class. The JP Morgan Bitcoin fund could roll out as soon as this summer according to sources familiar with this. South Korea is threatening to shut down all crypto exchanges amidst the growing crackdown there. The head of South Korea's financial regulatory agency has said that all crypto exchanges operating the country could be shut down later this year. Seoul's tax collection department kicked off the crackdown last week with the seizure of over $20 million dollars from over 600 tax evaders holding their assets in cryptocurrency. Korea's financial watchdog has also ordered employees to disclose their crypto holdings and their finance minister has said that taxing crypto is inevitable next year. South Korea has been one of the most active crypto markets in the world and so all of this jurisdiction and the scrutiny suddenly coming in the market there it will be fascinating to see how this actually affects the dealings as a result of all of this action. We've also seen the price difference what's called the kimchi premium between the crypto assets in South Korea and other regions actually come down as well so it's definitely having ramifications. On the local market, the European Investment Bank has also announced that it plans to issue digital bonds on Ethereum they've said that they plan to issue roughly $120 million dollars in digital bonds. The transaction is being held by Goldman Sachs, Santander and Society Generale. Ethereum also hit an all-time high shortly after the news. The former Ethereum co-founder and founder of Cardano, Charles Hoskinson has also announced this week the launch of an enterprise blockchain framework to provide financial services to the billions of people living in African countries. Working initially with the Ethiopian governments they've launched this Atala framework which is similar to the Hyperledger Fabric framework. What they're trying to do is focus less on fortune 500 companies and more on governments in developing countries. The intent is that the framework can be used for real-world use cases such as property registration, voting systems and supply chain management but it does also focus too on the digital currency adoption. There's obviously huge scope within parts of Africa where there is less sophisticated infrastructure to actually build some very innovative platforms utilizing blockchain so it's a very smart move by Cardano to get into this space and work directly with the Ethiopian government. In the UK Craig Wright's claim of inventing Bitcoin is being considered by a UK court. This is because of a copyright infringement he alleges on the Bitcoin.org website for hosting a copy of the white paper. The owner who ran the site refused to remove the white paper following Craig Wright's demand and so hopefully for the sake of the wider market, given that Craig Wright has so far been unable to prove his role in the creation of Bitcoin that it won't actually go any further than this. Apparently in April the crypto exchange volumes hits a new all-time high and crypto exchanges have seen 1.3 trillion in volume according to data collected by The Block. This is the highest ever they've seen on record this eclipsed the previous all-time high that was seen in February of this year. The other thing is that this figure also represents the third month in a row the volumes have exceeded one trillion of crypto assets. We mentioned last week about staking as well and the expectations is that staking of cryptocurrencies is going to double to be an $18.9 billion market by 2022, that will be up from $10 billion last year. This has come from a Ethereum infrastructure firm named Staked and the fascinating thing here of course is that staking earns real yield on crypto assets and so what they said in the report is that stakers have been earning yields typically between four percent and 34% in a quarter so with those sorts of returns it's only going to grow in interest especially as more and more people start holding cryptocurrency. Also the on ramp to being able to stake becomes easier and easier. In the NFL the number one draft picks Trevor Lawrence has a joined Blockfolio and received a signing bonus paid out in Ethereum and Solana. This is a significant deal because this is the first actual athlete to receive a significant amount of their signing bonus in cryptocurrency and they will actually be deposited directly into the players Blockfolio account. Under the terms, Lawrence will help educate newcomers with cryptocurrencies showing them how they can use the Blockfolio app to buy sell and trade cryptocurrencies. Additionally in the NFL, Sean Colkin of the Kansas City Chiefs has become the first NFL player to convert their entire salary to Bitcoin. The Gemini Exchange has partnered with Mastercard and Webbank to unveil a crypto rewards credit card where Gemini credit card holders will earn up to three percent cashback in Bitcoin on dining, two percent on groceries and one on other purchases. There's been significant interest in this offer from Gemini with over 140 000 people on the waiting list. The South Korean and Japanese gaming giant Nexon has invested $100 million in Bitcoin. The purchase represented less than two percent of its total cash and cash equivalents on hand. The firm added according to their CEO that they they see that Bitcoin offers long term stability and liquidity in the current economic environment while maintaining value for the company. The decentralized insurance firm Nexus Mutual has followed the DeFi activity to Polkadot, Cosmos and Binance Smart Chain by actually expanding its coverage beyond Ethereum which was the original focus of its offering. Basically what they do is they provide a yield bearing pool of funds that's locked in a blockchain to pay for claims sharing the risk among participants this has really come from the fact that there's more and more protocols emerging which people are developing apps on top of. JP Morgan, DBS and Temersec have formed a new blockchain firm to improve cross-border payments this is dubbed, Partior and the plan is that it will resolve pain points or frictions of payments trade and foreign exchange and settlement using blockchain technology. How this ties in with the Onyx payments platform from JP Morgan is not clear at this point. The AWS of blockchain, Alchemy, has raised $80 million and they plan to add new chains to their platform. They announced that they'd raised an $80 million series b funding which valued the company at over $500 million. Paxos as well have raised $300 million as it looks to onboard more PayPal sized clients. This raise will help the firm which powers PayPal's crypto offering to onboard larger clients. They are really very focused on having the support of the regulators with what they do and also offering clearing and settlement type services they've become the third firm to actually nab a trust license from the US office of the comptroller of the currency last week but they are still waiting for full clearance from the SEC to operate. As clearing agency they believe that the blockchain-based settlement business although it's not very profitable right now could be a very valuable long-term business model which is where they're going to be focusing on. Moving on to DeFi, the huge growth we've seen over the course of last year and has enabled the Metamask wallet that is very widely used to actually shoot shoot up to 5 million monthly active users. It hit the milestone of 1 million monthly active users only in October so it really is testament to how many people are actually working with it. A number of taxis are also going to start taking crypto payments on Ethereum. The mobile payments firm Hips and Nordic taxi payment rail The Payment House, partnered to allow cabs in the UK and Scandinavia to accept cryptocurrency this means that 10 000 taxis in the UK and 20 000 in Scandinavia can use the payment gateway after it debuts in beta in November. The number of addresses being used in the DeFi ecosystem has now exceeded more than 2 million. It's very important of course to note that this number of addresses is not active users but at the same time it shows that there's a significant amount of activity underlying this ecosystem. The DeFi lending platform Aave have announced that they're launching a liquidity mining program which is targeting the stable coin borrowers. Basically what this means is that these people will earn what they call the stAAVE rewards in addition to their standard interest yield. Moving over to NFTs there's been lots of activity here in the last week with the Cent platform now supporting the Polygon, formerly Matic, scaling platform on Ethereum. Cent has quickly established itself as one of the firms at the forefront of the NFT space after Jack Dorsey sold an NFT on the platform for $2.9 million. Using the Polygon Network will enable them to scale up but also reduce the environmental footprint of their NFT activity as well as it's directly transacting with the main Ethereum blockchain by making use of thematic scaling technology. Barbie owner, Mattel, said that they see an opportunity in NFTs and they expect to start finding ways to engage with their users via this according to their CEO. The rapper Eminem has also got into the NDFT game as well. He's unveiled a NFT collection called Shady Con. The auction house Phillips has sold a self-replicating NFT point for $4.1 million. The NFT titled 'replicator' is designed to create unique new unique tokens over the course of the next year. The artist who actually created it Micah Doback or Mad Dog Jones said the piece explores how technology has changed through time. Mastercard have also announced that they're going to help consumers directly offset carbon emissions and choose better products for the environment with its blockchain based provenance solution. This solution provides such granular detail that customers can choose a more environmentally friendly cup of coffee or sustainable t-shirt by interacting with carbon credits direct directly related to that item represented by a non-fungeable token on their blockchain. Binance have also announced that they're going to be launching an NFT marketplace in June. The idea here is to create the largest NFT trading platform in the world with the best minting, buying and exchanging experience by leveraging the fastest and cheapest solutions according to their the head of their NFT project. Given how successful Binance have been in growing as an exchange but also as a venue for DeFi as well, this is definitely very significant piece of news. It's fair to say that they may well be able to succeed with bringing significant number of people across to the platform when it launches. Sonic the hedgehog owner, Sega, is also planning to launch NFTs based on various assets and various IP that the company owns. The JUST NFT fund that has come from Justin Sun, the founder of Tron and CEO of Bittorrent, has announced this fund for the first collections which includes some of Picasso's works. The idea here is that these collections will be mapped to ownership of assets on the Tron blockchain and in his view it's the first show in history of picasso's work on a blockchain. Hasbro have also announced that they have plans for Magic the Gathering and more. These efforts by hasbro would presumably allow them to tokenize Magic the Gathering cards. Given how successful this this game is, I think the opportunities here are very significant for them. Aavegotchi have said that they aim to bring their NFTs to Ethereum by july. How they're going to do this is they're going to actually create a bridge to the Ethereum network. They're currently using the Polygon blockchain which we mentioned earlier on which is one of the Ethereum scaling solutions but they want to link it to the Ethereum mainnet by Q2 of this year. This will enable people to transfer assets between the two different chains and their concern is that still a lot of activities happening on the main Ethereum chain in NFT so it makes sense to support that. Dapper Labs, the creators of the Crypto Kitties and the very successful NBA Top Shots have said what they plan to do next is partner with the celebrity driven avatar technology company called Genies to create a new marketplace on their Flow blockchain. The new marketplace will be called the Genies marketplace and is aiming to become the Amazon of digital wearable NFTs where celebrities and ultimately users can create and sell digital NFTs. They plan to launch the beta version of this sometime in the third quarter and then finally, ConsenSys have made a foray into the Decentraland Metaverse. They actually had a company meet up towards the end of last month where they met up in Decentraland for a company-wide gathering in the Metaverse. Decentraland's a fully decentralized virtual world which became open to the public in 2020. ConsenSys moving this company-wide meeting there is really them embracing this Metaverse technology and bringing their staff together in a new place where they have a headquarters that have been built. It would be great to see other companies following suit and seeing how they can experiment with these new decentralized metaverses so to speak. In terms of our metrics, it's been another big week we've seen the crypto market capitalization is up now $2.21 trillion that's an increase of over 20 percent, the assets locked in DeFi is up to almost $70 billion which is an increase of almost 30 percent, the NFT sales average price and volumes have stayed pretty constant with an average price of just over $1300 dollars and volume of over 26 000 NFTs. That's all we have for this week if you like what you hear please subscribe to our podcast and YouTube channel. Links to all items discussed are available on the show notes and on our website weekinblockchain.com. We're also hosting a weekly Clubhouse room every Monday at 12 p.m eastern 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.