Artisan – #28 Weekly: Apr 17 – 21 | Web3 Narratives

🤔 Analysis & Thoughts

Pantera: Blockchain venture fundraising trends (Read more)

• Compared to a year ago, the later the round, the greater the discount right now. That discount lowers because there’s more VCs that are focused on the earlier stages or can go earlier
• Right now, the valuations of pre-seeds go from around 6 to 13M, seeds go from 13M all the way up to 40M post. In Series A, it can go from around 40M to 200M
• For PMF, VCs can take a little bit more of a flyer in the space if they invest in the early stages. But if they are investing in Series B or C, they have to think about how big this space could get based off of market size. If VCs are going into the infrastructure space, it’s really a bet on the space and the team
• Based on last year’s experience, anything consumer related is pretty tough right now, especially in areas that haven’t been proven out in terms of having some fairly large winners, at least from a revenue or evaluation perspective

The sandwich MEV profit is over $2M in the past two days, why? (Read more)

• One searcher named jaredfromsubway.eth has been raking in millions in profit from MEV opportunities on Uni V2 pools, with over 30,000 transactions over the past week
• This has been as a result of the rise in meme coin trading on Ethereum, such as PEPE and WOJAK. Given the speculative nature of these tokens, most traders are aping without checking their slippage tolerance, generating opportunities to sandwich unsuspecting traders
• This has also led to a significant amount of ETH burn in the last few days, as well as a spike in median MEV-Boost payments

How much of the withdrawn ETH has been re-staked after the Shanghai upgrade? (Read more)

• A total of 1,024,099 ETH ($2.15B) has been withdrawn. Among the top 15 withdrawal addresses: 3 addresses re-staked ETH after withdrawal, with a total of 19,844. 3 addresses transferred ETH to CEX after withdrawal, with a total of 71,444
• A total of 158,592 ETH ($333M) has been re-staked after the Shanghai upgrade. Among the top 20 addresses: there are 13 addresses that re-staked after withdrawing ETH, with a total of 34,198 ($72M) staked

The self sustaining flywheel of ve(3,3) and concentrated liquidity (Read more)

• Velodrome and Thena are building ve(3,3) with Concentrated Liquidity. For more mature ve(3,3) dexes capital efficiency ranges between 2x to 3x. The majority of revenue for voters has so far come from bribes from Velodrome because of low fees for sAMM and vAMM pools, and Thena has higher sAMM and vAMM fees so more revenue comes from fees
• The dream of ve(3,3) is a self sustaining flywheel where trading fees alone is enough to incentivize voters. The strategy for protocols includes: bribe hard to get emissions started for CL pool; building TVL in farm; fees sustain (or increase) next weeks emissions; gradually decrease bribes as fees ramp up; repeat if it slow down

Bankless: 5 bullish crypto market signals (Read more)

• Open interest represents the number of outstanding futures contracts held by traders that have not been offset or closed. Higher levels of open interest and liquidity improvement are a sign of improving market conditions
• The on-chain economy continues to boom. Active total daily addresses across major smart contract blockchains have held steady at 2 million and has increased by 77% since bottoming in late August
• The crisis on confidence in USDC has impacted willingness to hold stables. This is an encouraging sign of positive market sentiment to see a shift from dollar-pegged assets to tokens
• Not only has the volatility index been down, it is currently trading at levels previously only reserved for the bull market, breaching the pre-FTX lower boundary of $62.80
• After the Shanghai upgrade, the market, so far, has seemingly absorbed the first half million excess supply in stride. A sizable portion of ETH has not been sold, instead being restaked to the network

Why everyone is converging on the same path to scaling blockchains (Read more)

• Initially, there was a widely held belief that blockchains could scale with low validator hardware requirements. And the most prominent trend is execution sharding. But sharding brought with it more problems than solutions
• And for the assumption that if anyone could run a low-cost machine, the blockchain would be resilient to centralization, it’s also incorrect for two reasons: stake naturally concentrates to a small number of validators and MEV causes stronger centralization tendencies
• If a blockchain can’t stop its validator set from naturally centralizing, users need the means to cheaply verify if those validators follow the rules

That only leaves one solution. Blockchains where validators have high hardware requirements but verifying nodes have low hardware requirements. L1s like Ethereum and Solana have been moving towards this path

🌍 Layer 1/2s

Gnosis Chain spends $5M on validator incentive program for decentralisation (Read more)

• The new project is called ‘Gnosis VIP’, aims to increase the number and diversity of validators through incentive mechanisms, increasing the number of countries in which its validators are spread across from 60 to 180 by year’s end
• For each of the 90 countries listed on the program’s webpage, the first ten validators that start operating within them will receive 388 mGNO (~$1.4K) over the course of six months

Arbitrum proposal to return 700M ARB fails by overwhelming majority (Read more)

• Reasons behind voting against the proposal could involve the perception that more-minor voters are primarily concerned with increasing the value of Arbitrum’s governance token, while larger holders prioritise the platform’s long-term viability and the Arbitrum Foundation’s capacity to distribute tokens
• 118M ARB voted against the proposal, comprising 84.01% of the total vote, while only 21M ARB or 14.57% voted for the proposal

Sui mainnet will officially launch on May 3 (Read more)

• Sui is a Layer 1 blockchain designed to make digital asset ownership fast, private, secure, and accessible to everyone

a16z is building Magi, a new rollup client for Optimism (Read more)

• Magi is a blazing fast OP Stack rollup client written in Rust. Magi acts as the consensus client (often called a rollup client in the context of the OP Stack) in the traditional execution/consensus split of Ethereum – it feeds new blocks to the execution client in order to advance the chain

Web3 payments solution Helio raises $3.3M in Seed funding (Read more)

• The round was led by Peak and Lightspeed Faction, and featured participation from RockawayX, Solana Labs, and some angels
• Since launching in 2022, Helio has processed over $10M in e-commerce, NFT sales, SaaS subscriptions, content paywalls, and other payments for over 900 merchant customers and 35K users

💰 DeFi / CeFi / NFTFi

Crypto options exchange Deribit adds zero-fee spot trading (Read more)

• The availability of the spot market means traders no longer have to go elsewhere to exchange major cryptocurrencies and can set up multi-leg complex strategies in one place, all while enjoying zero maker and taker fees

Maple finance introducing the Cash Management Pool, where onchain allocators put idle capital to work (Read more)

• Non-US DAOs, Offshore Companies, Web3 Treasuries and HNWI participants can now put their idle funds to work in a Pool designed to provide them with the most direct access to Treasury bill yields, whilst meeting their liquidity, risk and accounting requirements
• Extra steps have been taken to ensure the pool is a first-choice cash management solution — assets are held in standalone single purpose vehicle, custodied by a regulated prime broker and Lenders have full recourse over all assets

Lido deposits surpass $12B as Ethereum’s Shapella boosts liquid staking (Read more)

• Lido has now seen a total of 141K depositors and its TVL surpass 6M ETH, equivalent to more than $12B, rising by over 20% from 5M ETH in January with expectations of the trend continuing

Binance to support the BNB Beacon Chain network upgrade and hard fork (Read more)

• Deposits and withdrawals of tokens on BNB Beacon Chain (BEP2) will be suspended starting from approximately April 21, 06:45 UTC, reopening after the network is deemed to be stable
• The BEP2 network upgrade and hard fork will take place at the block height of 310,182,000 at an estimated time of 07:00 UTC on April 21

PancakeSwap proposes lowering CAKE token inflation rate to 3-5% (Read more)

• The proposed lowering will cut CAKE inflation rates from over 20% to just 3-5%, moving CAKE towards a deflationary model by slashing the rewards paid to traders and stakers, and reducing emissions on the protocol’s main liquidity pool
• The proposal is open to community feedback for the next week and will then move to a “decision proposal” for final vote

Lido considers using ARB airdrop to boost activity on Arbitrum (Read more)

• Lido’s head of DeFi BD and partnerships has submitted a governance proposal that would allocate Lido’s ARB airdrop worth $1.2M as emission rewards to provide incentive for using wstETH throughout the Arbitrum ecosystem

GMX integrates with Socket to allow minting of GLP from any blockchain (Read more)

• This allows users to become an LP on GMX and earn fees, by buying GLP from any blockchain, with any asset, in a single transaction without the hassle of bridging
• The seven supported chains are Ethereum, Arbitrum, Avalanche, Optimism, BNB Chain, Polygon, and Fantom

Crypto exchange Bitrue exploited for $23M (Read more)

• One of the exchange’s hot wallets suffered the exploit, resulting in withdrawing approximately $23M worth of assets, but amounting to less than 5% of the exchange’s overall funds
• To conduct additional security checks, Bitrue has temporarily suspended all withdrawals and expects to reopen withdrawals on April 18, compensating any affected individuals

New stablecoin bill draft introduced in U.S. House of Representatives (Read more)

• While the draft is not in its final version, the current highlights include putting the Federal Reserve in charge of all nonbank stablecoins, a temporary ban on new stablecoins without fiat backing, allowing of the government to set interoperability standards, and directing of the Fed to study a digital dollar

Proposal for Yearn Finance to launch yETH submitted (Read more)

• The proposal suggests the launch of yETH, minted when users deposit into a basket of various ETH LSDs, enabling the reclaiming of the deposited value and, when staked, earning the associated staking rewards with a more blended risk-to-reward profile through diversification of LSDs

Perpetual Protocol deploys Curie v2.6.0 (Read more)

• The upgrade features two main updates that contribute to a fairer and more secure trading experience for users – the introduction of Mark price and improvements to Perpetual’s fallback oracles
• To obtain the Mark price, Perpetual will utilise the median of multiple prices, based on a TWAP, the index price and premium, and the contract price

Merit Circle DAO to launch gaming subnet ‘Beam’ in collaboration with Avalanche (Read more)

• Beam is a subnet created for the Merit Circle DAO to launch on the Avalanche network. This gaming-focused blockchain will not only facilitate the DAO’s products, but become the home for dozens of fascinating game

🖼 NFT / 🎮 Gaming / 🎭 Metaverse

Fitness-focused dapp Sweat Economy introduces 1-person, 1-vote governance system (Read more)

• A vote deciding how the protocol spends 100m SWEAT tokens will take place directly in the dapp’s mobile application, giving each community member one vote rather than wielding voting power proportional to the size of his or her governance token holdings
• The measures aim to combat inequalities baked into traditional decentralised voting processes, which favor wealthy token holders and project founders over ordinary community members

DefiLlama launches NFT dashboard (Read more)

• The dashboard provides historical NFT volume along with a breakdown of it by marketplace or aggregator, alongside metrics and statistics for each listed NFT collection

Nike is releasing its first digital sneaker collection (Read more)

• The NFT sneaker collection, called Our Force 1 (OF1) will launch on Nike’s recently-launched. Swoosh platform, having a choice of two digital boxes which each correspond to different possible designs
• Nike says that each NFT will come with a paired 3D file that holders can use to “express themselves in new ways,” and that it plans to add broader utility, including “exclusive physical products or experiences,” in the future

🏢 Institutional Adoption / DAO / RWA

Multichain and HK Web3Hub launches $10M accelerator program (Read more)

• The three-month long Web3.0 Global Acceleration Program aims to accelerate high-tech cross-chain application projects and build a MultichainVerse (MV) where all crypto ecosystems are united
• The program’s partners include blockchains such as Avalanche, Conflux Network, Fantom, Cronos, KAVA, and cloud service collocation partners such as Tencent Cloud and AWS

🧑🏻‍⚖️ Regulations

SEC alleges that crypto exchange Bittrex violated federal laws (Read more)

• The SEC plans to investigate claims that Bittrex worked with crypto issuers to delete problematic statements, including price predictions and statements implying an expectation of profit
• According to the complaint, the SEC also alleges tokens OMG, ALGO, DASH, TKN, IHT, and NGC as securities

Polygon calls on EU lawmakers to address smart contracts in Data Act (Read more)

• The company behind the L2 solution has called on policymakers in the EU to “clarify the scope and intent” of legislation targeting smart contracts
• Polygon has proposed for Article 30 under the Data Act to be amended to apply to permissioned smart-contract-based-systems owned and operated by an “enterprise,” as opposed to permissionless under the current wording

Bank of England preparing for greater role of tokenisation in finance (Read more)

• BoE deputy governor Cunliffe mentioned that the UK’s central bank is currently exploring tokenisation in bank money, non-bank money, and central bank money, and the ways tokenised assets will interact
• The four areas where this is being explored include stablecoins for payments, tokenisation of commercial bank deposits, issuance of a digital pound, and ensuring that these are robust and uniform

Ryan Berckmans shares a breakdown of stablecoin legislation currently being drafted in Congress (Read more)

• Members of the U.S. House of Representatives are circulating a new draft bill to provide a comprehensive regulatory framework for stablecoins in the U.S.
• Here is the high-level summary: 1) decentralized stables become illegal in the US. DAI, LUSD, RAI etc. 2) foreign stables become illegal in the US. National boundaries for stables; 3) ETH sees significant uptake as a payment method that’s both legal and decentralized; 4) licensed stables, eg. USDC, become huge winners and permitted to access Fed accounts directly

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