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 9th of August 2021. This week I'm not at home, I'm on holiday but like with these blockchain networks they never stop running and neither does This Week in Blockchain! So, the audio is not quite as good as normal but we've still got plenty of news to discuss. The highlights in this week's issue include U.S. lawmakers are split on how to tax and regulate the cryptocurrency transactions. The blockchain identity market is planned to grow by over three and a half billion over the next four years. The latest updates on Binance's regulatory challenges. The Ethereum London hard fork goes live. Chainlink launches a new interoperability protocol. Over six billion dollars is now tied up in the largest decentralized autonomous organizations. The weekly NFT trade volume has surpassed $300 million and Marvel launched their first NFTs. So, U.S. lawmakers are split over how they should be taxing and regulating cryptocurrency transactions and this is a dispute that's threatening to slow the passage of Joe Biden's one trillion dollar bipartisan infrastructure bill. The White House has called for closing this tax gap - the difference between taxes owed to the U.S. Government and those paid through a number of different measures including requiring large crypto transfers to be reported to the IRS or Internal Revenue Service. The Biden Administration says that this crackdown could raise tens of billions of dollars and help pay for a lot of the ambitious spending plans that have been outlined. The White House believes that the crypto reporting requirements could generate an additional 28 billion dollars for the U.S. Treasury. But lawmakers are divided over details of the reporting requirements and this is something that's actually across different party lines there. It's also sparked outrage among investors and slowed down the wider infrastructure package so it's come as something of a curveball that the crypto regulation has ended up, in effect, holding up moving this forward. It shows how significant this is in the views of lawmakers to get this piece right. Square has managed to raise over 55 million dollars in Bitcoin profit to expand the cash app. Jack Dorsey's payment startup, Square, has made over 2.7 billion of Bitcoin revenue in the second quarter of this year. Apparently the cash app generated this and there's 55 million of Bitcoin gross profit as well. They both are up approximately three times year on year however, the Bitcoin revenue has decreased on a quarter by quarter basis. That being said though, given how much growth they've actually seen in terms of the platform and just the number of users, they're just continuing to double down and invest more and their offerings. The crypto market intelligence firm Messari has raised 21 million dollars in its Series A. Coinbase Ventures, Winklevoss Capital and Kraken Ventures have backed the funding round. Messari is a provider of market data for market intelligence services for crypto. This is something that we've seen a lot in the past whereby firms have had very good valuations providing these these core services and the intent here is that they want to grow their research and engineering teams and offer more products. Coinbase has also announced a significant expansion of its payment integrations with Apple and Google. It's now going to be possible for iphone users to actually buy cryptocurrencies such as Bitcoin, Ethereum and others with a Visa or Mastercard link to Apple Pay. This is something they're actually opening up to work beyond just the Coinbase branded debit card so again it's just simplifying the on-ramps for people to actually invest in these crypto products. Coinbase has also announced that they're going to be acquiring the crypto data aggregator Zabo. Zabo is a data aggregator that enables firms to connect with crypto exchanges, wallets and protocols. The intent here is that Coinbase says by purchasing them, it's going to help further its mission of bringing crypto mainstream. The actual financial terms haven't been disclosed but apparently it's an acquisition not an acquire. Zabo was actually founded back in 2018 and provides APIs to enable financial applications to connect with user's crypto accounts. Binance has had a bit of another challenging week and now HSBC is the latest UK bank to actually block payments to the platform. It's basically no longer possible for people to make credit card payments to the exchange and this was off the back of the warning issued by the UK's Financial Conduct Authority. Again, this is about possible risks to customers and they're wanting to protect the customers from some of the fraudulent activities that are taking place on the platform. It's the third major bank to actually limit payments to the exchange. Binance has also now shut derivatives trading for its Hong Kong users. They announced last Friday that they wouldn't offer crypto futures and options trading to users in Hong Kong. Again, this is more than a reflection on some of the regulatory pressures that they're facing there. However, Binance have also announced that they're partnering with a crypto fiat hybrid payment solution provider called Alchemy Pay to offer users a seamless option to pay and receive crypto and fiat payments through the Binance pay wallet. It's important to call out that Alchemy Pay is nothing to do with the Alchemy API platform that provides infrastructure services for accessing blockchain and cryptocurrency networks. Alchemy Pay is a completely separate company. Again, this is more about just simplifying the conversion of going from fiat to crypto using their actual platform there. There's been some significant research released as well this week by Infinity Research. They forecast that the blockchain identity market is going to grow to by 3.58 billion dollars between 2021 and 2025. They've been speaking to a number of blockchain identity management vendors such as Accenture, Amazon, Bitfury Group and Civic. They've broken down in this report all of the places for impact it has there. Certainly, the opportunity for decentralized identity type services which actually remove the reliance that many organizations currently have and individuals have on centralized services such as those offered by Microsoft, Google and Twitter and on Facebook for authentication. It certainly has a significant opportunity to actually simplify the landscape there and provide people with greater autonomy over how they control their identity online. In a report released by ConsenSys, the largest DAOs or decentralized autonomous organizations which are basically smart contracts and you can think of it as code that runs on top of blockchains, the largest 20 of them now hold six billion dollars worth of digital assets. These are actually organizations that are governed by code, that actually hold these assets and so it just shows how much interest there is in this space. Although it's been slowly getting bigger and bigger, the DAO space, the amazing thing with this is that you don't have any specific people who have overriding control over these these styles. They're actually community managed based on token holders who are investing into these structures and so to see them grow to this, having over six billion dollars worth, is a very significant milestone there. AccuWeather have announced that they're bringing weather data to smart contracts. So, they're running a Chainlink node and what this will enable people to do who are using the Chainlink platform is to actually get real-world data and use that with the smart contracts is to have information such as temperature, precipitation, wind speed and actual disaster classifications. There's no doubt some interesting opportunities there for insurance type protocols that run in a decentralized way and also weather prediction markets as well and potential supply chain too. These sorts of bridges from the decentralized blockchain world to the real world, they just help expand what's possible for organizations and people to build on the platforms. The UK fashion and textile association has launched the blockchain traceability project partnering with IBM and a number of retailers including H&M, Next and New Look. The intent with this sustainability project is to have a supply chain traceability solution for the UK fashion industry and it's also supported by Innovate UK who've provided 1.4 million pounds of funding there. Apparently, the global fashion industry is one of the world's biggest polluters and the data from Quantis estimates that apparel makes up to 6.7% of the world's greenhouse gas emissions which goes up to eight percent when footwear is included which is apparently more than four times the estimated emissions from the airline sector. With the sustainability drives by these companies there's a clear sort of incentive there to actually move forward with this. In New York City, their finance department is working with Medici Land Governance on a proof of concept for land records. So, what they want to do is explore how blockchain can be used as a means of preventing deed fraud in land records. They're developing a proof of concept here for this. The department has property records going back to 1996 on its system and with this they're going to simulate 500 000 records and then display them through a newly built interface to test for accuracy, produce a greater transparency and reduce the chances of fraud for these land records. In the Ethereum news, there's been a very significant milestone that's happened this week with the London Hard Fork going live. So this happened just after 12.30 UTC on Thursday bringing in the Ethereum Improvement Proposal 1559. The intent here was to provide greater consistency around gas fees on the Ethereum network so that it makes it harder for miners to profit from the auction based model that was used previously for people bidding in effect on transactions. What it does is it just it makes it really fairer for the users there, that people if they know that there's a load of activity coming in, miners can't in effect bid up the prices to transact on the network and off the back of this Ether is actually burnt off it. This change was proposed a couple of years back so it's been around for a long time, but getting it over the line has taken a long time partly because they needed to have a lot of their cryptocurrency miners on board with this. Vitalik Buterin, the creator of Ethereum has actually said off the back of this that it's proof that the Ethereum ecosystem is able to make significant changes and in his view as well, it makes him more confident about the merge that's due to be happening next year to proof of stake which will get rid of the Ethereum Network's reliance on power hungry mining. EIP1559 introduced the token burn mechanism which basically meant that rather than all tokens going to miners in profits for transactions, some of them are being burnt and apparently the network's already burning over ten thousand dollars worth of ETH every minute on average. Chainlink have announced that they're providing a cross-chain interoperability protocol which is going to be a new global standard for decentralized inter blockchain messaging data and token movements. This is from the the words of Sergey Nazarov, their founder. They've also announced the launch of a programmable token bridge that makes use of this protocol and integrates with their automated smart contract service blockchain. Interoperability is a really hot topic we have. There's a number of different protocols and so on that are working on solving this problem but Chainlink with their significant position already empowering a lot of DeFi infrastructure with their oracles that they provide, it's a big move forward for them and they're well positioned to actually capitalize on that. Also related to this, Swisscom's digital asset division has announced plans to pilot a node on the Chainlink oracle network. Swisscom's a telecoms firm and they'll provide a digital asset pricing feeds on the network. Cardano as well, they're continuing to progress with their smart contracts platform for the blockchain. They announced previously, a week or so ago, that they've completed the Alonzo White Hard Fork and this was one of the big milestones for opening up these smart contract capabilities for their platform. What this will enable people to do is start working on decentralized finance, NFTs and decentralized identity initiatives. What they've done now is they've launched the connector for this decentralized apps integration on the network using its Yoroi wallet. This comes from a commercial arm and solutions provider of the Cardano Ecosystem known as EMURGO. Moving on to DeFi news, Bitwise has launched some new crypto funds and so this time these are funds for Aave, the decentralized lender, and Uniswap, the decentralized exchange. These new funds that have been created by the California-based Bitwise were invested directly into these. The Aave token and the Uniswap token, which are the largest DeFi protocols of their type. The weekly NFT volumes as well have now surpassed $300 million for the first time. This is according to data that came from The Block. Apparently, they actually went beyond $339 million, which is a 17% increase from mid-July where at that point it peaked at just over $200 million. Apparently, CryptoPunks account for the majority of this with over $200 million in transactions and then Axie Infinity for $127 million and NBA Top Shots about $4 million. The NFT unicorn OpenSea has also seen record trading volume off this with over 95 million dollars traded during the last weekend. It's a huge jump and again, CryptoPunks has been one of the big drivers there. As well, some users have also lost some funds trying to make these knock-off CryptoPunk NFTs. So you had CovidPunks that were created, which was a new collection of CryptoPunk with basically face masks on them. These NFTs sold out very quickly. However, as a result of this, some of the people trying to actually buy them weren't successful and the Ethereum Network got clogged. Transaction fees skyrocketed by a factor of six and some of the transactions actually failed to create them so users weren't actually able to get refunds for the spend. FTX is continuing to make big progress in creating more and more corporate ties and sponsorships. So now they've announced another partnership with Dolphin Entertainment to create an NFT marketplace for important sports and entertainment brands. The marketplace will be for there to deliver premium NFT based content covering genres such as film, television, gaming, music, esports, culinary and lifestyle. Basically, Dolphin will be creating interactive media branding whereas FTX will be offering their crypto services to underpin this. FTX has also struck a seven-year deal with League of Legend's Riot Games. This is so that Riot Games will actually place branding during a seasonal tournament of the game League of Legends. This isn't the first foray that FTX has had into esports. We spoke previously about them sponsoring other gaming leagues as well as some real world sports such as the Major League Baseball as well. This is the largest sponsorship agreement the Riot Games has signed to date. FTX are also sponsoring scholars in the Ethereum game Axie Infinity. They're going to provide funding to 137 Axie Infinity scholars in partnership with Yield Guild Games. The idea here is that it'll provide funding to breed new Axie monsters in the game and each is represented as a new NFT. So again, they're just making more and more headway into these lucrative partnerships with the real world as well as the digital world. Louis Vuitton has also announced that they'regoing to be launching a game app called Louis:
The Game to celebrate the 200th anniversary of the birth of the founder Louis Vuitton. The game's actually going to follow the journey of the fashion brands mascot Vivienne to Paris and feature 30 NFTs to be collected by players along the way, 10 of which were designed by Beeple. These are collectible but not for sale. Dapper Labs' NBA Top Shots that have been very successful NFTs we've spoken about a lot in these news updates, they're going to be selling their NBA Top Shots at games. So you actually have to attend, if you go to the NBA Summer League Games in Las Vegas, you'll be able to purchase new Top Shots there. It's a big change there and they're creating some exclusivity by making these NFT collectibles only available from a physical location. Previously, they've all been sold digitally so whether this kind of ushers in a new era of people traveling to the games just to secure these NFTs remains to be seen but they're continuing to innovate there. The United Nations has selected a blockchain platform called Unique Network to run a NFT initiative in order to inspire others to take action against climate change. Unique will be a lead technology partner for a program that's come from the UN's Human Settlement Program and International Association for the Advancement of Innovative Approaches to Global Challenges and they will mint young artists' work as NFTs. This actual platform has been created on top of the Kusama and Polkadot ecosystem and they will host an NFT marketplace for the initiative. They're going to be creating hackathons and other things to actually support this. The NFT marketplace MakerPlace has also secured a $30 million funding round which was led by Pantera Capital and Bessemer Venture Partners. They plan to use this funding to grow its team and expand their marketplace further. And then finally, Marvel has unveiled their first official NFTs. They're starting off with the iconic Spider-Man. What they're doing, they're launching these on the VeVe marketplace later this month and there's going to be some Spider-Man digital sculptures that will be priced between 40 and 400 dollars each with their other drops due later in August. Moving on to our metrics, the crypto market cap is up just under 14% to 1.84 trillion dollars. Assets locked in DeFi is just shy of $80 billion and that's up just over 14%. The seven day NFT sales up a whopping almost 200% with over $350 million and the average price for NFTs is up over 55 percent to over $5 000. 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 the 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 people, get their thoughts on the latest industry news and events spanning crypto, blockchain, protocols, DeFi, NFTs and IoT. Thanks and I'll see you next week.