Issue #30

Market Overview

As of the time of writing (Monday 5pm), the total market cap of the crypto asset market is $US1.12T, down 4.1% from last week.

Below is the weekly performance of the top crypto and NFT assets. 

News Headline Highlights

• Bloomberg has reported that Hong Kong’s ambitions to become a crypto hub have received discret support from Beijing, providing impetus for mainland Chinese crypto firms to return. Mainland China has historically been anti-crypto, with several historical all out bans on digital currency operations within China.
• Binance Australia has closed the derivative trading accounts of incorrectly labelled wholesale investor accounts. Derivatives trading is only allowed by wholesale investors as per Australian laws. 
• Spotify is starting to roll out a function called ‘token-enabled playlists’. The new feature allows users to connect their web3 wallets and access exclusive content if they hold specific NFTs.
• DZ Bank, Germany's second-largest lender by assets after Deutsche Bank, is partnering with Swiss firm Metaco to launch Bitcoin and crypto custody services.
• French merchant service technology giant Ingenico, with over 40 million terminals in 37 countries, has partnered with Binance to accept bitcoin and crypto payments in France.
• The Head of the Indonesian Commodity Futures Trading Regulatory Agency of Indonesia (Bappebti), Didid Noordiatmoko, stated that a local crypto exchange should be set up in 2023.
• The Bank of Japan confirmed their plans to launch a pilot phase for their central bank digital currency (CBDC) in April.
• Microsoft has partnered with decentralised blockchain infrastructure provider Ankr to offer blockchain node infrastructure service hosted on Azure.

 Crypto Asset Project Updates

• Coinbase, who has over 110m customers and  $80B in customer assets, has announced plans to launch Base, an Ethereum Layer 2. Base aims to be decentralised, permissionless, and open to anyone to develop applications on. Base is built on the MIT-licensed OP Stack, in collaboration with Optimism.
• Synthetix, a decentralised liquidity network, has deployed V3 of their design and smart contract infrastructure on the Ethereum mainnet following completion of security audits.
• Matter Labs, the organisation responsible for the development of zkSync, has opened their mainnet, zkSync Era, for pre-registered projects to start deploying their smart contracts.
• Yearn Finance announced the upcoming launch of yETH, a token that will give users exposure to a basket of ether liquid staking derivatives (LSD).
• Solana experienced issues over the weekend during a planned fork which resulted in a network outage of over 19 hours.
• The Frax Finance community has voted to change the collateral ratio of their USD stablecoin (FRAX) from 80% to 100% (i.e. fully collateralised), marking an end to the algorithmic backing of the protocol.

Regulation Station

• The Hong Kong Securities and Futures Commission has outlined plans to permit retail investors to trade large crypto assets like bitcoin and ether. The move is a major step in Hong Kong's policy shift as they strive to become a crypto hub.
• The US Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the US Office of the Comptroller (USOCC) issued a joint statement to U.S. regulated banks on liquidity risks to banking resulting from crypto asset market vulnerabilities. The purpose of the statement was to highlight capital requirements for banking high risk industries such as crypto which has recently put pressure on banks due to liquidity withdrawal requirements. However, in the statement, the agencies “remind banking organisations to apply existing risk management principles” rather than proposing new ones, and noted “banking organisations are neither prohibited nor discouraged from banking services to customers of any specific class or type”.
• US Securities and Exchange Commission Chairman, Gary Gensler, sat down with NYMag during the week to declare all crypto assets except for Bitcoin are securities, stating “these tokens are securities because there’s a group in the middle and the public is anticipating profits based on that group”.

The Weekly Deal Room

• Here Not There raised $25m in a Series A led by a16z to build out Towns, a Web3 chat protocol and application allowing online communities to build blockchain-based gatherings.
• Chaos Labs, an economic security and risk management platform for defi protocols, raised $20m in Seed Funding led by Galaxy Ventures and PayPal Ventures.
• Kratos Studios, an Indian web3 gaming startup, raised $20m at a $150m valuation in their Seed Round led by Accel.
• Worldwide Webb, creator of a pixel art-based metaverse game, raised $10m in a Series A led by Pantera.
• Web3 infrastructure startup Polyhedra Network raised $10m in a strategic round co-led by Binance Labs and Polychain Capital.
• Huma Finance, an income-backed lending protocol, raised $8.3m in a Seed Round from investors including Race Capital, Circle Ventures and Parafi Capital.
• TipLink, who are building technology to allow users to send crypto and non-fungible tokens (NFT) with a web link, raised $6m in a Seed Round co-led by Sequoia Capital and Multicoin Capital.
• Kaito AI, a ChatGPT-powered crypto search engine, raised $5.3m in a Seed Round led by Dragonfly Capital.
• Affine Protocol, a DeFi app offering users access to sustainable and diversified yield strategies, raised $5.1m in a Seed Round led by Jump Crypto and Hack VC.
• Renegade Finance, an on-chain dark pool that uses ZK-Proofs to build an anonymised decentralised exchange, raised $3.4m in a Seed Round led by Dragonfly Capital and Naval Ravikant.
• Curio Research, an on-chain gaming studio, raised $2.9m in a Seed Round led by Bain Capital Crypto and TCG Crypto.

Metric of the Week

Bitcoin Ordinals, which are digital assets (i.e. NFTs) inscribed on a single satoshi, have risen to huge popularity since their launch in January. This has resulted in inscription fee rates, mean block size, and taproot utilisation all growing rapidly, while the Bitcoin mempool (transaction queue) is beginning to fill for the first time in months.

Source: DataAlways and Dune Dashboards