This Week in Blockchain

This Week in Blockchain on 19th July 2021

July 19, 2021 Season 1 Episode 23
This Week in Blockchain
This Week in Blockchain on 19th July 2021
Show Notes Transcript

 Conor Svensson, founder and CEO of Web3 Labs, provides a rundown of the major #crypto​, #enterprise​, #DeFI​ and #NFT events from the past week. 

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Hi, it's Conor Svensson here, founder and CEO of Web3 Labs and this is your Week in Blockchain on Monday the 19th of July 2021. The highlights this week include Grayscale are looking to target their first ETF. The latest updates on Binance's regulatory challenges. Square is to create a new Bitcoin platform for financial services. The Ethereum DeFi ecosystem has hit 3 million users and the social experiment contained within Damien Hirst's NFT project. Our leaders this week, so Grayscale's main crypto fund is looking to become an SEC reporting company. The large cap fund represents a weighted group of some of the largest cryptocurrencies and the majority of these holdings are in Bitcoin and Ether, which is just shy of 93% as we discussed last week. Most of the remaining holdings are in Cardano but it also holds Bitcoin Cash, Litecoin and Chainlink. By becoming a SEC reporting company and with the additional form 10 filings that come with it as they're called, it shows the continued interest for investors to gain exposure in the digital asset space and makes it easier for participants to engage with the asset class. This was what the Craig Salm, the Vice President of Legal at Grayscale said. But also what's come out this week is how BNY Mellon are to provide ETF services after what is an anticipated GBTC conversion. So, their Bitcoin fund called GBTC they're looking to turn that into an exchange-traded fund where they've requested that BNY Mellon gets involved with a number of back end roles for it. Basically what BNY Mellon would end up doing is handle accounting and administrative services starting in October which would eventually morph into them being a transfer agent and ETF services provider in the future. The reason for this moving towards being an ETF would massively open up the number of people who could invest in the fund itself. Right now, the GBTC fund holds 22 billion dollars in assets and so there's a huge scope for growth there if they can convert it into an ETF. Binance's regulatory woes again are still ongoing. They've now been dropped by the European payment processor called Clear Junction. People in Europe who want to transfer funds into Binance or withdraw funds, often use Clear Junction who's like a transaction processor. This was off the back of the UK's financial watchdog the Financial Conduct Authority or FCA, issuing a consumer warning against Binance Markets Limited and so what Clear Junction have said is that they want to act in full compliance with FCA regulations and guidance in regards to handling payments of Binance. Now, the important thing to remember here is that it's not that using Binance in the UK is illegal or the FCA have said that's not possible, what they have said is that Binance can't offer financial products in the UK for this so it doesn't mean people can't actually use the service that's located overseas which their exchange is. However, the caveat for companies like Clear Junction is that they come under the watchful eye of the Financial Conduct Authority and so it kind of makes sense for these sorts of companies providing these auxiliary services to pay heed to what the regulators are advising and their kind of temperament because ultimately it could spell problems for them down the line with the core services that they want to offer with this backdrop. However Visa and Mastercard have acknowledged that they're still going to continue with their partnerships with Binance despite the ongoing concerns. Visa have said that they're still in dialogue with Binance and Mastercard noted that they're interested to see how the exchange reacts to the regulatory scrutiny. What Visa and Mastercard are being used for is for people funding their Binance accounts using these payment rails so no doubt they're a nice source of revenue as well for these companies. The Italian securities regulator Consob, have issued a warning against Binance as well saying that the crypto exchange is unauthorized to operate in the country. In kind of in a similar vein to what other regulators have said is that they can't offer investment services and these sorts of activities. What they have also said is that some of this is for binance.com as well and so certain things like derivatives and stock tokens are in Italian on the Binance website and so this does potentially have some issues there but it doesn't directly impact being able to use the services as such on the website. Finally, Binance have also come under fire from the Hong Kong regulator as well. What they've basically said is they're not going to support these tokens that are linked to stocks, which they literally released about three months ago on the platform. They've stopped enabling people to buy new ones now. It was one of these things that a regulator is just not really getting behind and so I think coming from Hong Kong as well, it's certainly the first noise we've heard from the Hong Kong regulator about Binance's activity so we'll see if it's limited just to this. Square, the payments platform, have said that they're going to create a new business focused on creating an open developer platform to make it easier to provide non-custodial decentralized financial services. This is what Jack Dorsey, the founder and CEO of the company, said in a series of tweets. He said that this primary focus would be on Bitcoin. What's fascinating here is that Jack Dorsey has been a big proponent of Bitcoin for a long time however, with this specific initiative they're looking at ways in which you could create a DeFi ecosystem around Bitcoin. DeFi right now very heavily revolves around the Ethereum ecosystem because of its programmability capabilities and so Square getting behind it trying to invest more in Bitcoin is definitely an interesting proposition. They're using something called the Lightning Development Kit and they're going to be obviously pushing hard into this as well so definitely it'll be one to watch but whether it can actually affect Ethereum's position in DeFi here of course remains to be seen.Fidelity Digital Assets are planning to increase their head count as well in the company because of ongoing institutional interest in cryptocurrencies. They've said that they're planning on hiring as many as 100 employees to help bolster their cryptocurrency projects and this has been reported by Bloomberg. Apparently they're looking to hire new employees in Dublin, Boston and Salt Lake City offices as well. Cryptocurrencies other than Bitcoin would be the main focus of this, Ether being a big one and because they've seen a lot of interest in Ethereum off the back of its all-time high reached in May. They're also looking to increase how much crypto trading they provide as well. S&P Dow Jones, they've launched five more crypto indices. Last week, we mentioned about them having created some crypto indices and now they've got one that's called the Broad Digital Market or BDM index which is over 240 coins. It's still not clear exactly which coins are in it but they say it's a broad snapshot of the the crypto market. In Australia, Visa is set to approve the first card over there for actually spending Bitcoin. A startup created by a couple of university graduates, they've certified crypto spend where they want to issue a physical debit card to facilitate crypto payments. The intent here is that people can use these cards to pay at retail establishments and hospitality venues with Bitcoin. However, what they can't do with this platform is make direct purchases instead of converting the crypto to fiat which of course, is one of the things that typically happens at this point with these claiming services, they convert to fiat at the point of payment. In Brazil, their SEC have approved South America's first ETF. So the Brazilian Securities Commission or CVM has authorized the first ETF in Latin America that tracks the performance of the Ether cryptocurrency. This is following suit with a number of different regulatory jurisdictions, we've seen quite a few ETFs have been launched in Canada in recent months and unfortunately nothing yet in North America. Certainly, just having this launch in Latin America just it shows the broader appetite there is for these products. Paypal as well this week, they've increased their weekly limit on crypto purchases for users of the platform to 100 000. Previously it was at 20 000. The intent here is that they've obviously seen a lot of demand from their users to go beyond that limit whether that's for trading or other things wasn't reported, the point is it shows that they're just embracing the the cryptocurrencies more and more. Over in enterprise news, the Responsible Mica Initiative and the blockchain based traceability platform Tilkal announced the solution to enhance the traceability of mica which is a mineral dust that's found in makeup products, insulation cables and cement. The Responsible Mica Initiative have been mapping the mica supply chain in India since 2017 but it's been very manual and labour intensive. So this Paris based NGO, which has got a number of leading firms including L'oreal, H&M and Porsche, want to use Tilkal's blockchain technology to create end-to-end real-time traceability platform for this though the hope here is that it will enable our the RMI to verify the supply chain of its members and equip them with all the information they need to implement responsible workplace practices. One of the risks there is that in the supply chain, it's susceptible to things like child labour which obviously people don't want to be seeing in there. In Australia again, the government has granted four million, just over four million dollars to a couple of pilot projects there to study the capabilities of blockchain in supply chain. The intent here is that the research will help ease regulatory compliance burdens. It invested in Everledger and the tech consultancy Convergence.tech. The intent of course, is to increase the competitiveness of Australia's technology offerings but also minerals, food and beverage sectors. Moving on to protocols, the Ethereum money stream protocol Superfluid has raised nine million dollars in a seed funding round included backing from Multicoin Capital but also participants from Semantic Ventures, the DeFi Alliance, Divergence Ventures and others. This injection will help Superfluid grow its team and build an ecosystem of real-time financial applications and so this is where they want to be able to do things like include subscription payments salaries and rewards and so on with singular on chain transactions to support this. Band Protocol as well have announced they've gone live with the next generation of their protocol called BandChain 2 and so they've built on top of the Cosmos blockchain. Cosmos is one of the leading interoperability protocols. What they want to do is make it easy for data providers to run nodes themselves rather than have intermediaries acquire the data, which is what other oracle services like Chainlink do as such. So the push here is to be more transparent and more decentralized which is what other data services like API3, which we discussed previously transitioning to a DAO have done. They've got partnerships that they're working on with Google, Microsoft and Bloomberg so again it'll be interesting to see how they go. Also, they've joined the Open API Initiative too which certainly will position them well for enterprises. Cardano have expanded their testnet support and added support for smart contracts. They've carried out this hard fork and upgraded its testing from Alonzo Blue to Alonso White. This phase will run for two to four weeks before Cardano moves on to the next phase. One of the key things with Cardano, although it's grown significantly as an actual platform in terms of popularity, they haven't released on their production network yet their smart contract platform and so once this gets live it will greatly increase the appeal of their ecosystem because people will be able to have smart contracts based decentralized applications running on top of it. So with this upgrade, they're actually allowing about 500 validators and staple operators and developers test out the features. Then the final part of the upgrade would be taking place in September 2021. In DeFi, the Ethereum DeFi ecosystem has actually hit 3 million users now. This number came from Dune Analytics where they looked at the number of unique addresses that were interacting with DeFi and that, as of July the 13th, has hit over 3 million. They were looking at one of 24 different applications tracked by the platform. What's interesting here certainly is because there was obviously a big crash of prices in May, the DeFi adoption has continued to see exponential growth during this time. Apparently it took approximately 11 months for the number of unique addresses to grow from 100 000 to 1 million but the subsequent growth has been at even faster intervals, going from one to two million took 142 days whereas the jump from two to three took only 78 days. It's fascinating to see this growth. Uniswap as well, we mentioned previously about this, were planning to make this move in terms of running on top of a layer two platform to enable them to scale more. They've said that they're now doing that alpha launch on Optimism. So Optimism is one of the leading layer two scaling protocols like Polygon and it enables teams to get a much higher transaction throughput with this kind of linked to the main Ethereum network. However, optimism have been talking about the launch happening in July whereas a Polygon they're obviously live and have moved faster than Optimism in terms of just getting traction there. But, Uniswap is one of the few protocols that has now been deployed to it and what will happen here is the transactions will confirm instantly so there won't be this whole thing of waiting 30 seconds or so, you know sometimes it's a bit faster, for a trade to go through on the platform. It's bound to be very popular and the other thing here is that apparently Uniswap is currently the biggest consumer of gas on Ethereum and so certainly by addressing this issue of the gas fees but also the amount of gas they're using it'll be better for all. It will certainly, from the point of view of users, mean they have to pay less for their transactions and they will happen a lot faster. It'll mean that users have to spend less on it. Then mentioning the Polygon network, a project called DinoSwap has raised 4.7 million dollars. They're positioning themselves to be the next Pancake Swap but on the Polygon platform. The key thing here to watch is the total value that gets locked on the platform but it could certainly end up being like the main platform to earn yield on Polygon if it gets large enough there so definitely one to watch. Fireblocks , the asset management and crypto custody platform, have integrated Polygon into their cyber security and asset management tools. Now we mentioned previously about how Aave had actually provided support on Polygon and also that they were using Fireblocks for their KYC on their their institutional platform as well, so I guess there's no surprises there that they're doing this. What it basically means is that major funds and institutions will have what they need to interface with the blockchains in terms of security and regulatory compliance so this support for Polygon is a key building block for that especially when you look at it within the context of the the Aave Pro platform that we spoke about last week. Moving on to NFT news, the Los Angeles Dodgers are auctioning an NFT with a physical world series ring. The LA Dodgers are the reigning champions from the 2020 baseball season announced that they'd auction a physical World Series ring as part of a platform with a single edition non-fungible crypto collectible. It also includes the opportunity to throw a first pitch at a game at the Dodgers stadium in LA as well as have tickets to that game. In addition to this bundle, the Dodgers are off offering a common open edition NFT during the same time span which is available for twenty dollars with all proceeds going to at the same charity as the the main NFT bundle. The winners of the Twitter NFT giveaway have formed a group to retain their value. They've come together to form an organization with the goal of maximizing the value of their new collectibles. The group nearly 50 of the Twitter NFT owners as well as representatives from Twitter itself and so because some of the owners have actually sold their pieces while others have held on to them, what they want to do is they're talking about potentially forming a DAO so that there's a way for people to engage with that there. Mark Cuban's Nifty's social marketplace for NFTs has launched with a new line of NFTs based on the movie Space Jam: A New Legacy and also has a $10 million seed round which has got a lot of big name investors behind it. Of course, that's no surprise, given who Mark Cuban is, that they were able to get that. This is ties in with the new Space Jam sequel, for those of you who remember, sort of 20 probably 20, 30 years ago there was a Space Jam movie, and they've got the NFT to go along with it. So, it's certainly fun to see how they're deciding to do these these kinds of NFTs with these movies and so on that are coming out. American Express as well, they're offering an NFT in collaboration with a singer called SZA which is exclusive to American Express card holders. They're priced at a hundred dollars each. Each of the tokens is a single limited edition and they can also be resold in secondary marketplaces as well. And then, Damien Hirst, we spoke previously about he was planning to launch an NFT with Palm, the NFT blockchain platform that's been spun out by ConsenSys. So Damien Hirst listed this project the Currency in collaboration with with Palm and what he's actually doing here is giving buyers the opportunity to purchase copies of these images for two thousand dollars. But, there's a social experiment element to it whereby buyers for the two thousand dollars they either get the piece of art or an NFT - they can't have both. So they need to decide whether they go with the NFT and then the actual piece of art gets burnt or they keep the art and then the NFT gets burned. The actual art itself is a series of 10,000 of his widely recognized spot paintings which are signed in watermark sheets of A4 paper along with digital watermarks in the form of NFTs on a blockchain and these are selling for two thousand dollars each. It's going to be fascinating to see the response from people who actually invest in this because no doubt, it is going to be very popular but whether they decide to go with one of the sheets of A4 or go with the NFT , it's a fascinating experiment. The fantasy soccer NFT platform Sorare apparently is closing in on 532 million dollars in funding. This is a French NFT based soccer trading guard card game which is attracting a valuation of $3.8 billion. This latest funding round is expected to be led by the Japanese telecommunications giant Softbank, as as well as some other leading VC firms. Although there are question marks of course over the actual the popularity of NFTs and how big the market is, I mean seeing some of the valuations that are happening here it is incredible. If you think about it, Circle, we mentioned last week, who provide the USDC stablecoin, you've got kind of these similar things where there's some very attractive valuations for certain companies who are doing very well in the space. Also, Dolce and Gabbana, they're looking to launch an exclusive NFT collection in collaboration with UNXD which is a digital marketplace powered by the Polygon network. They're looking to become an exclusive marketplace for digital luxury and culture. The first concept in the collection is inspired by a dream by the designers Dolce and Gabbana. Other NFTs will be released in due course and be exclusively auctioned on the platform. We also mentioned previously about Sygnum, they've teamed up with art investment firm Artemundi to offer fractionalized ownership and shares in a Pablo Picasso painting for six thousand dollars. These will represent ownership of over three point six eight million dollar Picasso painting. So, that's all we have in terms of the news, moving on to our metrics. The crypto market cap this week is down almost nine percent to one point three trillion dollars. Assets locked in DeFi have stayed roughly constant, just shy of $55 billion. The seven day NFT sales are up 172 percent so 67 million dollars worth with an average price up 30 percent of thirteen hundred dollars. 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 in the show notes and on our website weekinblockchain.com. We've also launched a brand new podcast called Blockchain Innovators where I speak to individuals who've made significant contributions to the blockchain ecosystem. Find out what inspires these innovators, get their thoughts on the latest industry news and events spanning crypto, blockchain, protocols, DeFi and NFTs. The podcast is available on all the usual platforms and our YouTube channel and via the website podcast.web3labs.com. Thanks and I'll see you next week.