This Week in Blockchain on 7th June 2021

Hi, I'm Conor Svensson, founder and CEO of Web3 Labs and this is your Week in Blockchain on Monday the 7th of June 2021. The leaders this week include Miami's Bitcoin 2021 conference taking place and some of the announcements there, the Binance Smart Chain community are calling for action against the flash loan attacks, has Elon broken up with Bitcoin? BNY Mellon opens their digital asset services unit, China announces a $6.2 million digital currency giveaway, Komgo closes another funding round for their trade finance platform, one-third of DeFi lender Aave's total value locked is now on Polygon and Charged Particles NFT platform for token baskets. The Bitcoin 2021 conference took place this week in Miami and there were a few key announcements that happened during this. One of them was the Miami Dade County's Commissioner implored attendees to move to the region enticing them with their pro crypto government initiatives including the potential creation of a campus for the Bitcoin industry. Blockchain.com, a New York headquarter crypto company, said that they would move their 300 strong business units to Miami. It was also pointed out that the NBA franchise, the Miami Heat is now sponsored by cryptocurrency exchange FTX, which was co-founded by Sam Bankman-Fried and Gary Wang in 2019. Another huge piece of news was El Salvador making a big announcement in the final hours of the conference. The president there Nayib Bukele announced that he will send a bill to the country's congress to recognize Bitcoin as legal tender. A lot of the other information from the announcement was lost because of the loud applause but the intent here is for El Salvador, if successful, would become the first place in the world where Bitcoin is legal tender. How that would fit in with other regulators that deal with El Salvador and other jurisdictions does have something of a question mark but nonetheless it's a significant country trying to achieve this. Following Elon Musk's tweets over the previous few months about Bitcoin, he posted one this week that indicates that he might have actually broken up with the cryptocurrency. He had an image which showed a relationship breakup with the hashtag Bitcoin with a broken heart next to it. So whether this is the last we hear from him remains to be seen but he did follow up with a cartoon saying "I miss you" so who knows what will happen? We know in the last few weeks anyway there's certainly been some big announcements from Tesla in terms of first embracing Bitcoin but then raising their concerns about the environmental impact which we spoke about in more detail last week. The Binance Smart Chain community has called for actions after a series of flash loan attacks. You'll recall that the Binance Smart Chain is based on Ethereum, it was something that Binance launched in the second half of last year. Most weeks we've been discussing the attacks that have happened on that platform during our episodes of this podcast. The thing here though is that the Binance Smart Chain community are calling on the leadership of Binance to try and take some action here because there seems to be a lot of flash loan attacks happening where people find ways to drain money and funds out of the DeFi projects that are running on it. It's not to say that it's the only platform that's susceptible but because there's a lot of activity happening on it there, the community have taken to Twitter because they really want some of the Binance leadership to actually step in and try and create some sort of controls or take action. Some more crypto exchange traded products have begun trading on Euronext Paris and Amsterdam. These are launched by investment firms Wisdom Tree, VanEck, 21Shares and the ETC group. They're all listing exchange traded products which unlike exchange traded funds, are backed by a central party so if that party goes out of business then investors in the funds will miss out. However, these are going ahead and they began trading on 1st June so the products that have been listed are the Wisdom Tree Bitcoin and Ethereum products on Euronext Paris and Amsterdam, VanEck have got their Vectors Bitcoin exchange-traded notes and Ethereum traded notes, ETC group have got physical Bitcoin and physical Ethereum. These have all got their own associated management fees associated with them but at least it gives another way in which investors can get access to these. BNY Mellon, the world's largest custodian bank, has opened up a unit for digital asset services. They expressed regret about not getting involved with this earlier on but what they've done is they've created a cryptocurrency custodian framework in Dublin, Ireland. The intent is that they'll provide a number of different services for users including storage transferring and issuing of digital assets. It's regulated by the Central Bank and will deal with Bitcoin and digital currencies and non-fungible tokens so this is a huge piece of news given how significant BNY Mellon are within the traditional finance industry. There's this wider consideration here because banks have always been in the business of looking after money on behalf of people so there a logical argument that they're well placed to provide similar services for crypto related assets and so them stepping in here is very significant news. The American and Swedish authorities have started to signal there'll be stricter crypto oversight and certainly there's been some activity with respect to UK banks restricting transfers to digital currency exchanges. The financial regulators in Sweden and the US have hinted at impending crackdowns on the crypto markets. Part of this is driven by the absence of a consistent framework for this technology and the risks for consumers with financial crime. There are announcements from a number of different regulators in these different regions, you'll recall previously that we spoke about how in the UK, Natwest and HSBC were not very crypto friendly in terms of the dealings with their account holders but also Starling, Monzo and Barclays have reportedly suspended payments to cryptocurrency exchanges to address high levels of suspected financial crime with payments that they've seen. It's funny to see how on one side you've got these banks really clamping down in order to protect consumers but also prevent things like money laundering but then you've also got them opening up all sorts of services to cater for investors who want to get exposure to the asset classes. It's an interesting mix in terms of what's happening on both sides. Coinbase have announced that their Visa debit card is now linked with Apple Pay and Google Pay. This is something that's been in circulation for quite a long time where people can use their crypto to pay for transactions with Visa but by integrating it with Apple Pay and Google Pay it makes it a lot more convenient for users to use it especially with the significant growth of these services that we've seen during the pandemic. The debit card also includes some opt-in crypto rewards including 1% back in Bitcoin and 4% back in Lumens which is the native token of the Stellar blockchain. Guggenheim have launched a new fund and they may be investing in Bitcoin and other cryptocurrencies. They made a filing to the SEC where they said that they may get this exposure, so again it'll be another big name potentially embracing crypto. China's capital city of Beijing have announced they're going to hold a lottery for residents with the total prize pool of 40 million renminbi which is $6.2 million US. The winnings will be distributed using the country's upcoming central bank digital currency as reported by Reuters. Google have clarified the advertising rules for cryptocurrency exchanges and wallets. These groups will have to reapply for certification under the new rules that are coming in later this year and the point is that a company needs to be registered with FinCEN as a money service business and at least one state as a money transmitter or be registered solely with a federal or state chartered bank entity. This has obviously been an ongoing problem for crypto businesses because the amount of fraud and scams that operate in the space they need to have good legislation in place to ensure that when you get these adverts on widely used platforms such as Google that they are legitimate entities advertising to consumers. It's good to see that there's some more structured regulation being put in there. The British banking giant Standard Chartered is getting into the crypto industry as well. Their innovation and ventures unit, SC Ventures, is collaborating with an Asian partner to launch a digital asset brokerage and exchange platform for institutional and corporate clients in the UK and Europe. The intent here is to target European markets connecting institutional traders to counterparties in order to deliver deep pools of liquidity in Bitcoin, Ethereum and other cryptos. Anchorage and the crypto focused BankProv are to provide Ethereum backed loans. Institutional clients who use Anchorage Digital for custody will be able to use their ETH as collateral for USD loans, that's actual USD loans not USDC loans. Anchorage is a cryptocustodian and so this again is another innovation bridging the conventional fiat world with crypto. The Solana blockchain which there's been a lot of talk about recently, are raising up to $450 million. It's another platform that's being positioned as a so-called Ethereum killer. They've raised a large amount of money to scale up their ambitions including that they want to become one of the go-to homes for decentralized applications. They're raising between $300 and$450 million. They had planned to close a smaller round in March but they've now planned to increase this due to high demand. Solana have also launched the $20 million fund to advance the ecosystem. This was weeks after they drew$60 million in funding for projects in Brazil, Russia, India and Ukraine. One of the problems that a lot of these protocols face is that they build this great technology but then they need to develop the ecosystem. We're seeing more and more of these funds being created in order to incentivize developers to build on top of their platforms. The Ethereum 2.0 network has seen more than $5 million ETH sent to the deposit contract. At the time of recording that's 5.2 million ETH which is worth about $13.6 billion. The crypto exchange volume crossed $2 trillion in May which was the the highest ever volume we've seen. No doubt with all of the selling activity that happened it resulted in this higher figure but again it's a significant milestone to reach. Ethereum transaction fees hit the lowest level since January. Because of the downturn we've seen in the crypto markets, the average price is now down to just over $7 which was the lowest that since the end of January where they were just under $7. Ethereum also saw $46.8 million worth of institutional inflows last week with investors taking advantage of the low market prices. Cryptology is to invest $100 million in crypto venture funds. The cryptology asset group, an investment firm co-founded by Mike Novogratz and Christian Angermayer, have committed to invest $100 million in crypto related venture funds over the next two years. Kraken have launched a new mobile app with the support of over 50 tokens. Kraken, we've spoken about previously that they're due to be going public next year, is a widely used exchange but not quite as widely used as the competitors Coinbase and Binance. Nonetheless, this is them trying to capitalize on the success that Binance and Coinbase have seen with consumers on the different app stores. They're also talking to the advantages that their technology provides for better execution prices and so on but often we know it's usability that tends to be the the biggest drive. In enterprise news, the blockchain trade finance firm Komgo has raised $29 million, this was its third round of funding. Komgo blockchain is a trade finance platform targeting the commodities sector. It was launched in 2018 by a consortium including ING, ABN Amro, Shell, Societe Generale and a number of other leading organizations. It's big news, of course we know that trade finance is one of the very strong use cases for blockchain but given all of the institutional support behind Komgo and that they've been silently building for the last few years again it's good to see that they're continuing to grow and get more funding. Polygon and AU21 Capital have announced a $21 million fund to support Polygon developers. This is to try and help grow the ecosystem. Polygon comes up a lot in terms of these discussions each week because a lot of companies and protocols are starting to build offerings on top of it. This will no doubt help with that. Master Ventures have now launched a $30 million Polkadot fund, this again is to help grow the Polkadot ecosystem. In DeFi news, the Ethereum DEX aggregator 0x has launched on Polygon. That again is another entry point for developers which enables them to take advantage of the scaling provided by the Polygon platform. DeFi protocols generated more than $370 million in revenue during May. It's just showing more and more traction happening in this space. Taking the top spot was UniSwap which reached just under $154 million, Sushiswap was the next largest at 20.3%, followed by Aave at 16.6%. These were all on Ethereum so the things like Pancake swap and Binance Smart Chain weren't in this report. There's been an announcement that UniSwap's going to be sponsoring the esports squad Team Secret with a grant of just over a hundred thousand dollars. There was a post from Team Secret saying that they're going to create educational content around UniSwap and crypto currencies and develop esports industry activations for the partnership. ConsenSys, the blockchain technology company, have pledged support for a UniSwap governance proposal to set aside tokens for a new decentralized finance fund for political lobbying. The proposal was made by the Harvard Law School Blockchain and FinTech Initiative for creation of a fund that would finance existing and new political groups engaged in crypto policy making and lobbying to defend the fight against regulation. No doubt there will be more regulation that comes in the future but right now, one of the great things about DeFi is so much innovation is happening because there isn't much regulation. There is of course the downside with the different attacks that we're seeing but at the same time, things can innovate at a fantastic rate. The other significant news in DeFi is on the Aave protocol, their total value locked has soared past $20 billion with one third of this on its layer two platform Polygon. Polygon we've mentioned earlier on their developer fund, have come up a lot here but they're one of the leading Ethereum scaling protocols. So, to just to have one third of their assets that are locked on the platform Polygon is not not only a significant figure, it also shows of high degree of faith in the Polygon protocol. It's big news for Polygon and no doubt very helpful for Aave as well. Ultimately it provides a better user experience for people when they're able to make use of these layer 2 scaling technologies as the transaction fees are not as high and also the transactions happen faster too. In the NFT news, the crypto exchange Korbit is launching South Korea's first NFT marketplace. On this platform, NFT creators will be able to auction their digital assets on the website and they'll be carried out on Ethereum. The NBA, MLB, NFL and NHL partner Fanatics have launched a NFT platform. Fanatics is a popular sports merchandise company. They've teamed up with Galaxy Digital's CEO , Mike Novogratz and Gary Vaynerchuck who's a very famous influencer to launch a non-fungible token company called Kandy Digital. How this affects some of the other companies that have got agreements in place such as Dapper Labs with NBA Top Shots remains to be seen but this is significant news for sports fans. In the NFT space in Australia, the first ever NFT exhibition is coming to Melbourne. The NFT stars marketplace are organizing this exhibition called Sibus, the idea here is that they're going to introduce the audience to the world of digital art and it'll run during July for 10 days introducing a diverse range of artists and include an educational programme. RealCryptoPunks announced a unique NFT collection with Vitalik Buterin images. This is combining the picture of Vitalik along with CryptoPunks. They've created a series to determine what it would look like if pixelated characters were real life beings with the RealCryptoPunks. There's all sorts of different things that they're doing here to create these characters such as having apes, aliens and zombies with different rarity tiers . They'll be compatible with the the usual NFT marketplaces.These tokens are still being issued at the moment but it'll be interesting to see where they get to. There's a new NFT protocol which is being launched called Charged Particles which is an NFT protocol that enables people to create baskets of NFTs that contain other NFTs or regular tokens. The intent is that people have the freedom to configure NFTs to hold baskets of what they want. People can then get exposure to and they can time lock these assets into it. It's a very fascinating innovation because it gives people the flexibility to easily pull together the different NFT and non-NFT assets that they own and they create an interest bearing token for it. Etherscan have launched a NFT toolkit which will enable people to track the NFT activity on Ethereum. Given how widely used Etherscan is for viewing details with transactions and so on, it's really helpful for them to provide better support for NFTs. Certainly, a lot of the time it's quite hard to make sense of exactly what's happening so it's good news to see that moving forward. Then the crypto exchange FTX launched an NFT marketplace platform. It's hosted on the main and FTX exchange as well as their US website. The tokens that are being listed there are based on both Solana and Ethereum. Animoca Brands subsidiary is planning to launch a collection of Olympics themed NFTs. The International Olympic Committee is partnering with nWay, a subsidiary of Animoca Brands to launch these tokens. They're tokenized physical badges that celebrate posters, mascots and more from the Olympic Games' 125 year history. Moving on to our metrics, the crypto market cap it's up just over 6% to$1.65 trillion. The assets locked in DeFi are up 10% to $66 billion. The seven day NFT sales are down almost 33% to $12 million over the period with an average sale price down by a similar amount to $535. That's all we have for this week, if you like what you hear please subscribe to our podcast, leave reviews and like the videos on our YouTube channel and comment there as well. It would be great to hear what you think! Links to all items discussed are available in 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 pm GMT if you'd like to discuss any of the items we've covered here. Thanks and iIll see you next week.