Each week your host, Conor Svensson, founder and CEO of Web3 Labs, will provide a rundown of the major events that took place in the blockchain industry that are relevant to business during the past week. We cover #crypto, #enterprise, #DeFI and #NFTs.
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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 26th of July 2021. The highlights this week include FTX's funding round giving it a whopping 18 billion dollar valuation. Aave is building Twitter on Ethereum. BlockFi is now coming under regulatory scrutiny. Tianjin releases China's first blockchain based carbon offset certificate. Cardano create their own stablecoin. The first decentralized exchange launches on Polkadot and Polygon has announced the gaming studio for NFTs. FTX, the exchange, has closed a 900 million dollar funding round giving it an 18 billion dollar valuation. This is a series B round which incorporated investments from a number of leading names which included Softbank, Sequoia Capital, Paradigm, Lightspeed, Alan Howard and the Paul Tudor Jones family among others. In total, 60 investors participated in this raise and this is by far the largest in crypto investment round that has taken place dwarfing Circle's $440 million deal that happened not that long ago which was the previous largest. The Aave DeFi lending platform has announced that they're going to launch an alternative to Twitter using Ethereum this year. What they want to be able to do is enable users to monetize the content that they post and help govern the rules of the network. I think one of the funny things here as well is that you had Stani Kulechov the founder and CEO of Aave announcing that in reference to Jack Dorsey previously saying that he was going to build DeFi on Bitcoin he said since Jack is going to build Aave on Bitcoin, Aave should build Twitter on Ethereum. The intent here is to address these core problems that sit at the heart of a number of web 2.0 technologies and social media platforms which is the vulnerabilities to censorship and the exploitative pay structures that benefit the actual creators of the platform rather than the users who obviously don't get compensated in any way for what they do as such. So again, it would be fascinating to see if they get this off the ground. BlockFi has hit some regulatory hurdles, the New York New Jersey Attorney General has issued a cease and desist order against them. What they want to do is stop BlockFi offering interest bearing accounts. With BlockFi, they've certainly had a lot of significant investments since 2017 when they were launched. They've raised $500 million in private funding and have a valuation of $5 billion so coming under this scrutiny is somewhat of a surprise given how well established they are in the space but potentially a sign of you know what's to come for more of these platforms. Jack Dorsey, the the CEO and co-founder of Twitter has said that Bitcoin is going to be a big part of the company's future. This is the first time he's actually gone into a lot of detail about his views there but he thinks it could be integrated into Twitter's products. He believes that Bitcoin is the best digital currency positioned to be a native currency on the platform and although people may not necessarily agree with that sentiment, it's certainly one to watch to see exactly what movements he makes there. Off the back of this as well, Cathy Wood's ARK Investment Management has increased the holdings in the payment services company Square which Jack Dorsey is also the CEO of because he's spoken in terms of wanting to create a more open developer platform. No doubt, the support for Bitcoin kind of ties nicely in that as well. The creator of the Cardano project, Charles Hoskinson has said that his company Input Output Global that develops a lot of the Cardano software has created its own stablecoin. They've called the new coin 'Djed' as in Djed which is a crypto-backed pegged algorithmic stablecoin. The white paper hasn't been released just yet but they're saying that their users have spent a significant amount of time verifying the project from a sort of theoretical sense. Certainly one of the things that Charles Hoskinson and the Cardano team are very big on is actually trying to apply a lot of academic rigour with proofs and so on to the work that they do so it's coming from a place that's very well grounded in theory and in a perspective that's provable in terms of the theory that it is used to describe it. Softbank have announced that they're going to invest 75 million dollars in the Peter Thiel backed crypto exchange Bullish. This is a subsidiary of Block.one. Block.one are the creators of the EOS blockchain and certainly Peter Thiel was an investor in. Block.one is planning to go public by the end of 2021 by a special purpose acquisition company merger with Far Peak Acquisition apparently. According to Fidelity, the vast majority of institutions are going to be owning crypto by 2026. They believe that the number of wealth managers, institutional investors and foundations has increased dramatically and will continue to do so. According to this survey 70 percent of institutional investors intend to buy or invest in digital assets in the near future with over 90 percent planning to by 2026. Yes, it is an optimistic survey but Fidelity being who they are within the financial markets and a very significant player there it certainly is worth taking note of this. Mastercard have announced that they're partnering with Paxos and Circle for crypto to fiat conversions. What they're looking to do is trial new solutions to expand the ability for people to spend digital assets using Mastercard cards with Paxos and Circle. Certainly, Circle being one of the companies being leaders in the space they want to see if there's a nice way that they can do this. Mastercard did say previously that they did not plan to directly support cryptocurrencies on its payment network but wanted to enable native support of stablecoins and central bank digital currencies. So what the users want to be able to do is have their payments converted into these stablecoins transparently and no doubt with with platforms like Visa providing this support for crypto exchanges and many Visa cards where it happens at the point of sale, if they can start to do this more natively on their platform it's going to certainly streamline this from the perspective of Mastercard. Binance, there's been less news about them in terms of regulatory woes this week which is good for them but they announced that they've completed the second largest token burn of the BNB token since in its history. They've just completed their 16th quarterly BNB token burn which removes 1.3 million BNB tokens. Binance have also said that they're partnering with Koinly to help Australians with tax reports. The Australian Tax Authority or ATO sent a letter to 350 000 Australian crypto investors last year to remind them that disposing of cryptocurrencies could result in capital gains tax obligations. Sam Teoh, who works for Binance Australia, said that approximately one in six Australians are investing in crypto so it's quite important that they can help address this. With Koinly, users can sync their wallets and exchanges in one place and the software imports their transactions and figures and calculates the taxes. This is certainly one area that we expect to see grow a lot more in the coming months and years, especially now that in many jurisdictions the actual legislation around tax with regards to capital gains when people dispose of crypto assets has been defined. Certainly with many of these platforms the ease with which people can buy and sell cryptos or maybe stake them and to get them further yield on them are all taxable events and so software to actually simplify this for the major platforms is going to be paramount for getting the information that the tax authorities need. JP Morgan has become the first big bank to give retail wealth clients access to cryptocurrency funds. JP Morgan has been trying to significantly grow its 630 billion dollar wealth management business. They'll now take orders to buy and sell five cryptocurrency products, four from Grayscale Investments who is one of the leaders in this space, well is the leader in the space in terms of assets under management with their investment exchange listed investment products, and the other is from Osprey Funds. This came into effect in the last week. In China, Tianjin has released China's first blockchain-based carbon offset certificate. This was just days after they launched its national carbon market. The offset's been built using Ant Chain which is Ant Group's enterprise blockchain platform. This is really significant news because the opportunity for blockchain to actually help with issuing and tracking carbon offsets in terms of where they were originated from and also what carbon emissions they're offsetting, blockchain is really well suited to this. It's certainly a huge growth area but to see, much like China have been making rapid progress with the adoption of central bank digital currencies, they also now seem to be looking to pioneer as well what's happening in the carbon market. Certainly from the point of view of aiming to achieve its carbon neutrality goals by 2060 it's really good to see these sorts of initiatives happening. Allianz, Europe's largest insurer, has announced that their blockchain claims solution, that streamlines international motor insurance claims, is now live in production and deployed across 23 European subsidiaries. What's certainly notable here as well is that in the six weeks since it was launched, it processed about 145 000 transactions supporting over 10 000 international accident claims. They're very excited about the opportunity here and certainly insurance is another area, especially around claims management, which is very, very valuable for blockchain because of the number of different intermediaries involved in the process where someone needs to underwrite an insurance policy and then you have someone wanting to make a claim on it, there's various communication back and forth through the different parties that needs to happen so it's great to see that progression there. In protocol news, there's been a lot of of movement happening especially with regards to EVM compatibility or that's Ethereum Virtual Machine compatibility. Neon Labs has announced that they're going to be deploying their cross-chain Ethereum Virtual Machine solution on the Solana testnet. What's very significant about this is that the vast majority of the smart contracts that are in existence on public blockchains, especially in things like DeFi and NFTs, run on top of Ethereum and Ethereum uses its Ethereum Virtual Machine to run those smart contracts. So by these other protocols adding support for the Ethereum Virtual Machine or EVM, it makes it a lot easier for people to take code that you can run on Ethereum and then run it on these other blockchain networks. So it's certainly a very attractive proposition for blockchains that are emerging blockchains who want to bring more people onto their platform because it provides a very familiar environment for them and familiar back end for it to run. With Solana, they're very much pushing the high transaction throughput that they provide on the platform as well as the lower gas prices and so it's certainly going to be attractive for people who want to build on top of Solana and as we've spoken previously, they've received a great amount of funding as well in recent months. Crypto.com as well they've deployed an Ethereum Virtual Machine testnet again, to support Ethereum applications. They've released this in a similar vein to Binance Smart Chain, Binance Smart Chain is an Ethereum compatible network as well. So, Crypto.com obviously wants to try to take a piece of the pie so to speak that Binance has been so successful with and give people an opportunity to natively run applications on their platform for it. Coinbase's Bison Trails group have also announced that they're adding developer tools for Solana blockchain. They've got query and transact products there which make it a lot easier for people to access and verify blockchain data and to transact with these different networks. Reddit has announced that they're going to be scaling their Ethereum-based token platform using the Layer 2 scaling platform called Arbitrum. Reddit came out earlier this year talking about using Ethereum for a Reddit coin. Of course, given the volumes of transactions they want to be able to support, it makes sense for them to use a scaling solution for this. Right now, it's going to be on a testnet but they plan to move across to the main Ethereum blockchain via this Abritrum Layer 2 technology. The transition to ETH2 has now got a formal Ethereum Improvement Proposal in place. So, EIP3675 which discusses upgrading the Ethereum consensus mechanism to proof of stake has now been defined. This is significant because it's going to be the proposal that is used to help coordinate this change. The team have been speaking in terms of the new network going live in the first quarter or so of next year but I'm sure that we're going to see EIP3675 being talked about a lot more now in the coming months. Over in the DeFi news, Terra has attracted 150 million dollars for its DeFi ecosystem fund. This is the South Korean company behind the Terra public blockchain and they've raised $150 million from a number of major crypto investments for this. This is to sponsor projects that are building on top of the Terra blockchain. It's actually a tendermint based blockchain which has a number of stablecoins based on its Terra USD stablecoin. Grayscale, the digital asset manager is launching a DeFi fund and index. They already provide a number of products for tracking the major cryptocurrencies so having something there that will give people broad-based exposure to DeFi assets including Uniswap and Aave will no doubt be very, very popular. The Maker Foundation have also announced that they're moving to using a DAO model or Decentralized Autonomous Organization. So the foundation's actually going to dissolve in the next few months and transition to this new fully decentralized code-based governance model which we've certainly seen more of the cutting edge and forward-thinking companies in the blockchain space moving towards. SushiSwap, the exchange, has unveiled four new crypto trading products during Ethereum's EthCC conference that has been happening during the past week. What they want to do is they've created a new base layer for SushiSwap that will allow users to easily create their own liquidity pools which are basically the contracts which different assets are deposited and provide liquidity to the market. The idea here is that it enables people to have specific properties that they can exploit. So for instance, you can have one of the things they've said, is a constant product pool which is where you have a pool that is split between two different tokens and then also a concentrated liquidity pool which enables providers to specify a range in price to which provide liquidity. Certainly the ability to specify these ranges will be helpful for people who want to avoid price slippage which can impact the investments that they're making if they're actually helping make the markets with these different products. Also, the first decentralized exchange on the Polkadot, Kusama ecosystem has now been launched by Karura the DeFi network which is part of the Acala Foundation. Karura Swap has opened up for trading and it's got 3.4 million dollars in total value locked according to a recent announcement. It'll definitely be one to watch being the first decentralized exchange on the platform. A lot of people are very excited about the premise of Polkadot, so seeing how the total value locked there evolves over the coming months will definitely be a good reflection on how the community as a whole is responding to Polkadot. There's been a lot of activity this week in NFTs as well. So, the South China Morning Post is going to be minting historical records as NFTs. They've introduced what they call it 'Artifact' a standardized model for recording accounts of history and historical assets as NFTs. This is similar to what we've seen like Time magazine do with respect to minting NFTs about key events that have happened there. What they're looking to do here is have a collection of historical moments from its 118 year history. Also, Alibaba's e-commerce website, Taobao, is going to include NFT Arts in its Maker festival. They're planning to sell a non-fungible token based real estate during this festival and this is going to come from artist Heshan Huang working alongside Near Protocol and Web3Games in order to do this. Polygon as well, the Layer 2 scaling platform on Ethereum, they've announced two that they're creating a new venture called Polygon Studios. What they want to do is have a brand that attracts top builders, artists and investors to the NFT ecosystem. This Polygon gaming studio is going to help developers and teams create blockchain enabled gaming experiences with great infrastructure and tooling. There's been also a a raise of 1.9 million dollars via NFTs for an Ethereum documentary. So this was a production company called Optimist, they raised this ETH for a documentary all about the development of Ethereum. Apparently according to the filmmakers, 'Ethereum the Infinite Garden' will include interviews with Vitalik Buterin as well as Aya Miyaguchi who's the Executive Director of the Ethereum Foundation. It was funded on the crypto backed blogging platform Mirror and the backers of this actually get a thousand $INFINITE tokens for every one ETH that they contributed. Whether this is the start of a new trend for fundraising documentaries, we shall see. Also, the Auditchain Labs AG, the developer of the world's first decentralized accounting financial reporting audit and analysis virtual machine for assurance and disclosure, have announced their NFT platform for allocating royalties between curators and validators of standard logic based accounting and disclosure control components. So the idea here is that people will be able to disclose accounting information and those who validate it they can actually create NFTs off the back of it. You can think of it as like a token being created about some reports that have been submitted to the platform. This notion of taking this data and NFT, it's got a huge potential growth and it's definitely one to watch closely. The NFT marketplace OpenSea has now become a 'crypto unicorn' with a 1.5 billion dollar valuation. They've closed a $100 million series B funding round led by Andreessen Horowitz which gives them this unicorn status. Apart from Andreessen Horowitz, the latest investors include Ashton Kutcher, Michael Ovitz and Kevin Hartz. They also announced that artists buyers and sellers will no longer have to pay transaction fees on its marketplace. This is because they've got an integration with Polygon, the Layer 2 technology, and it's certainly going to be a good thing because OpenSea is a very widely used platform for selling buying and selling NFTs but the gas prices can be something of a barrier for people listing as well as buying on top of the platform. The blockchain platform Enjin, has said it's become the first NFT company accepted into the United Nations Global Compact. In order to do this, companies need to align their business models with the 10 principles derived from UN declarations on human rights, labor and anti-corruption on the environment. Enjin has said that they've made significant strides in lowering the climate impact of NFTs. Of course, because they've created their own network here rather than actually running on top of the main public Ethereum network with their JumpNet blockchain which we've discussed previously. Damien Hirst's Currency NFT drop that we discussed in the previous couple of week's episodes, has been more than six times over subscribed. It consists of ten thousand unique colourful dot artworks and a corresponding NFT for each piece. The applications closed this week and the Heni Group, who actually hosted the sale, revealed that there was more than six times the number of subscribers than there were actual pieces available. As we said before, the fascinating thing about this is that people who actually purchase this piece of art, they have a choice of either having the physical piece of art or an NFT - they can't have both. So it's certainly going to be a fun one to watch to see how it evolves. A crypto entrepreneur is planning to gauge interest in whether there's appetite in the market for a collectible from the deceased Apple co-founder Steve Jobs. There's a software company called Snoofa which is going to be auctioning off a 1973 job application from Steve Jobs before he joined Atari as a technician. At the same time the marketplace Rarible will be auctioning a tokenized version of the paperwork to test which version will attract more bidders and higher bids and at what rate. So certainly when you look at what's happening with the Damien Hirst NFT or piece of art, maybe this is going to be an indication of which better to go holding - the NFT or the original when you can't hold both. Also the EIP1559 which was spoken about previously which is going to make the fees more efficient on the Ethereum network, Stateful Works have announced that they're going to unveil commemorative NFTs for the upgrade. They're going to be contributed to those people who actually wrote the proposals and the client teams who changed their software to support it. Also, a startup that lets you race NFT horses has raised $20 million from Andreessen Horowitz. Virtually Human Studio provides a platform for training, breeding and racing digital horses that can then be sold for real money and have been fetching significant sums on platforms like OpenSea. Apparently, these funds will be used to expand its engineering and product teams and more than 30 million dollars worth of these digital race horse NFTs have actually been sold. DraftKings is getting into the NFT market as well. They've announced that they're creating a marketplace aimed at curating sports and entertainment themed digital collectibles for their enthusiasts. The platform is debuting later in the summer and will be a potential significant expansion for the fantasy sports betting company. Valuart, a startup that mints licensed NFTs derived from original artworks, has also launched its first drop. The auction for Spike, a digital artwork based on the Banksy installation first surfaced in Palestine, has commenced and 50% of the proceeds will go to charity. And then finally, Tyson Fury, the boxer, an NFT that's been signed by him has sold for nearly 1 million dollars. This was sold on the marketplace HoDooi, making it one of the most expensive sports NFT sales ever. This is a one-of-a-kind token that was titled 'Lineal by Tyson Fury' had an illustration of the boxer with two championship belts on his shoulders as well as his crown with his nickname on it - the Gypsy King. Over to our metrics, the crypto market cap is up to $1.4 trillion that's up 8.7 percent. Assets locked in DeFi are up almost 12 percent to just under 61 billion dollars. The seven day NFT sales are down 20 percent and we've seen just under $54 millions worth with an average price, again down, 11% to just under $1200. 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 are available in our show notes and at our website weekinblockchain.com. We've also launched a brand new podcast 'Blockchain Innovators' where I speak to individuals who have 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, NFTs, DAOs and IoT. Thanks and I'll see you next week.