Artisan – #16 Weekly: Dec 19-25

Review of algo-stablecoins, the 2022 staking ecosystem report, crypto valuations signaling the end of crypto winter? investment trends of 5 crypto verticals, building a crypto data unicorn, token supply’s effect on the price, 5 memes that define DeFi in 2022, Lido on Solana v2 is live, Uniswap’s credit card…

🤔 Analysis & Thoughts

End-of-year review of algorithmic stablecoins (Read more)

• 2022 was a tough year for algorithmic stablecoins and as of today, their market cap is just $2.36B, 1.6% of the total stablecoin MC.
• Tron’s $USDD and Wave’s $USDN are the only two UST type algo-stables that are solely minted with their native coins as collateral and both are trading below the peg. 
• Celo’s $CUSD is a shining star and the peg is stable, but MC and trading volumes are low: $42M and $1.2M, respectively. At $1B market cap, $FRAX is the real leader in the category.
• More innovation & experimentation has been brought by $UXD which uses delta-neutral position derivatives, $BEAN which is a credit-backed stablecoin, and $DEI that is a fractional reserve stablecoin used within the DeusDAO derivatives ecosystem, but their MC is low.

The 2022 staking ecosystem report (Read more)

• Validators are potentially facing existential challenges that threaten not only their business but also the entire decentralization ethos of blockchains.
• Survey results from users and validators highlight an apparent necessity for decentralization, further user education, and a better user experience for non-custodial staking.
• Two improvements that will improve decentralization in 2023 are DVT and efforts to democratize MEV.

Coinbase: 2023 crypto market outlook (Read more)

• Digital asset selection will transition towards higher quality names like bitcoin and ether based on factors like sustainable tokenomics, the maturity of respective ecosystems, and relative market liquidity.
• Investors’ willingness to accumulate altcoins has been severely impacted by the deleveraging in 2022 and may take many months to fully recuperate.
• The next market cycle in digital assets will be shaped in significant part by the development of standards and frameworks for regulated entities.

End-of-year review of decentralized exchanges (Read more)

• In 2022, DEX devs focused on innovations related to capital efficiency, reducing slippage, impermanent loss and fees.
• Solutions from DODO, Trader Joe, Hashflow, etc are built around concentrated liquidity or market maker models.
• Other developments include expanding to other chains & NFTs like Uniswap, launching stablecoins like Curve, or use veTokenomics like Velodrome.

The forest for the trees: Are crypto valuations and fundamentals signaling the end of this crypto winter? (Read more)

• The US DXY’s peak is not validated by fundamentals, which means that financing conditions are likely not favorable enough for a cyclical bottoming of crypto prices yet.
• Crypto neither appears excessively “rich” nor “cheap” relative to the S&P 500.
• In the scenario of a US recession and equity market sell-off, it is likely that both equity and crypto risk premia jump together, which would likely translate into a further (and last?) leg down in crypto prices.

Annual report 2022: Capture investment trends from evolutions of 5 major crypto verticals (Read more)

• Cipholio Ventures analyzed the current competitive landscape and investment logic of the five core verticals: L1/L2, DeFi, Gaming, NFT, and Social.
• The crypto Merrill Lynch clock divides the crypto market into four quadrants according to the degree of economic growth and inflation: recovery period (application), overheating period (Meme), stagflationary period (protocol), recessionary period (middleware).
• The crypto market will continue to cycle through the four cycles mentioned above, and the core segments in the cycle will repeat the rotation of Application-Meme-Protocol-Middleware.
• We are currently at the intersection of overheating and stagflation and should choose the protocol layer sector to focus on in 2023. And to look ahead of the market, the best strategy at the moment is to also focus on the development of middleware and even application layer in systems with high growth potential.

Advice on building the next crypto data unicorn (Read more)

• At this point, there are many affordable and performant options for getting raw on-chain data. And the users want to see the context of the data. You need to be building a great interpretation layer on top of your raw data.
• The best way to break through the competition is to pick a target audience and then deliver interpretation layers that: 1. Other teams aren’t building 2. Your target desperately needs.
• The most important differentiator is to have a more accurate interpretation layer than other companies. It’s not enough to tell me that you’re accurate. You need to show them evidence of how wrong you’re competitors are and how right you are.

The curious effect of token supply on price (Read more)

• Data from top 718 tokens over 2020-22 shows that 10% increase in a token’s total supply is related to an average price decrease of 5.1%.
• 10% supply increase leads to almost 7% price drop on average in bear market but 3% price drop in bull market.
• Negative relationship between supply growth and price growth seems to only hold for more established tokens with larger MC. For micro-cap tokens (MC < $1.5 million) increasing supply may actually lead to higher price growth.
• Effect of supply shrinkage on price is stronger than supply expansion. 10% shrinkage could lead to 32% price increase and 10% expansion only lead to 4.9% price decrease.
• Relationship between supply growth and price growth doesn’t change whether the token has a finite supply cap in the future or not.

Key takeaways from the “insider’s account” of the FTX disaster (Read more) 

• Caroline says Sam directed her to take customer funds from FTX in exchange for the made-up $FTT shitcoin.
• The violations peaked in 2022, but began from the start of FTX. This wasn’t a recent accident. It was a multi-year fraud.
• Sam and Gary own 100% of Alameda, Sam owns 90% of Alameda and Gary 10%. Alameda has no clients – all that money is Sam and Gary’s.
• Over $8 billion of customer funds were wired by customers DIRECTLY to ALAMEDA rather than FTX. This was a de facto loan but Sam ensured Alameda didn’t have to pay FTX interest on that money.

🌍 Layer-1 / Layer-2/Infrastructure

Linera presents the Linera whitepaper (Read more)

• Linera introduces the idea of operating many chains (potentially millions) in parallel in the same set of validators. They are called microchains. In Linera, scalability is obtained by adding chains, not by increasing the size or the rate of blocks.
• After careful consideration, the team has decided to concentrate our efforts on WebAssembly (Wasm) for the execution layer of Linera.

The last testnet published for an upgraded Polygon zkEVM (Read more)

• This is the final testnet before mainnet for Polygon zkEVM.
• Researchers at Polygon introduced the use of recursion in a zkEVM, resulting in batch aggregation. In addition, an optimized prover now generates proofs for a batch in under 4 minutes (down from 10).

Core Scientific files for bankruptcy (Read more)

• Core Scientific Inc (CORZ.O), one of the biggest publicly traded cryptocurrency mining companies in the United States, said it filed for Chapter 11 bankruptcy protection, the latest in a string of failures to hit the sector.
• Austin, Texas-based Core Scientific attributed its bankruptcy to slumping bitcoin prices, rising energy costs for bitcoin mining and a $7 million unpaid debt from U.S. crypto lender Celsius Network, one of its biggest customers.

First phase of StarkNet’s governance launches (Read more)

• The first vote to approve or reject proposed changes to the StarkNet protocol will take place soon.
• The participants in the votes during the first phase will be: token holders, delegates selected by token holders who prefer to delegate their voting rights, delegates selected by the StarkNet Foundation to exercise some of its voting rights and a professional Builders’ Council, set by the StarkNet Foundation.

Waves will launch a new stable coin (Read more)

• According to the founder of Waves Sasha Ivanov, he will launch a new stable coin and there’s a USDN situation resolution plan set in motion before.

💰 DeFi / CeFi

Opyn announced a new product: the Zen Bull Strategy (Read more)

• Zen Bull allows users to stack ETH while maintaining 1:1 ETH exposure (delta = ~1).
• The strategy performs best in zen (calm) markets when the price of ETH increases slowly.

UMA to release UMA 2.0 in 2023 with introduction of $UMA staking (Read more)

• Risk Labs foundation announces the multi-phased release of UMA 2.0 over 2023, the first to be complete in January.
• Here are 3 milestones to watch for in the 2023 UMA 2.0 roadmap: UMA token staking; simplified Oracle interactions and security model.

The five memes that defined DeFi in 2022 (Read more)

• Market collapses: It’s been a straight line down for DeFi metrics in 2022. Yet it didn’t strike at DeFi’s core. The ignored narrative is that the market collapse did not lead to a DeFi protocol failure.
• Regulation: What is true this year is that regulators have smartened up to the in’s and out’s of DeFi and the crypto ecosystem, especially for stablecoins.
• Cosmos, appchains, and modular blockchains enter the DeFi arena. With DeFi’s advances and bottlenecks, the industry began to explore entirely new infrastructure.
• The entrenchment of MEV: The MEV arena will move off of Ethereum and onto a standalone network that can balance the benefits of MEV profit extraction and the need to democratize and decentralize that market.
• Where are the cool, new DeFi apps: The industry spent 2022 researching and building the DeFi infrastructure and market structure, more progress will be needed before innovation can move back to the app layer.

Lido on Solana v2 is live (Read more)

• The v2 version of Lido on Solana brought about a series of validator economy changes: Removal of 100% commission nodes; Validators to receive block + staking rewards in SOL (instead of stSOL); Set the maximum node commission to 5%.
• The v2 changes were focused around node operator profitability and simplicity, ultimately contributing to a more secure staking experience for Lido users.

The Ren 1.0 Network will be shutting down on December 20th (Read more)

• As a result, renBTC holders will no longer be able to bridge these assets back to the native Bitcoin network.
• Make sure to remove exposure to renBTC on Curve/Convex/Badger and etc. ASAP to avoid potential loss of fund

Voyager announces agreement for Binance.US to acquire its assets (Read more)

• Voyager announced that its operating company Voyager Digital LLC selected Binance.US as the highest and best bid for its assets after a review of strategic options with the core objective of maximizing the value returned to customers and other creditors on an expedited timeframe.
• The Binance.US bid, which sets a clear path forward for Voyager customer funds to be unlocked as soon as possible, is valued at approximately $1.022 billion.

The $GLP price and AUM value is currently wrong (Read more)

• There is an odd behavior that when shorts closed, the AUM would drop and lose 0.1% of value in just 1 Arbitrum block. This is because the PnL value used in the AUM calculation is INCORRECT.
• The GMX team must have also figured this out and published a new contract calculates the Trader Shorts PnL based on the Github information.
• The GMX team is trying to slowly switch over to the new calculation by using a weighting for the new calculation, possibly preventing from a significant and sudden change in the $GLP AUM and price.

Uniswap and MoonPay partner to support users’ use of credit or debit cards to purchase crypto assets (Read more)

• Major payment methods like cards and bank transfers are supported. This will vary depending on the region.
• Users can purchase crypto and send to any wallet on Ethereum mainnet, Polygon, Optimism, and Arbitrum.

🖼️ NFT / 🎮 Gaming / 🎭 Metaverse

Blur, financialization, and renewed interest in NFTs (Read more)

• Blur has quickly come to dominate NFT volume since its launch in October, dethroning OpenSea.
• Blur’s specific focus on UI features such as sweeping and sniping has immediately found a fit with high-volume traders.
• Demand for NFT financialization tools will likely rise as HODLers hunt for liquidity.

Warner Bros. announce Game of Thrones digital collectibles (Read more)

• Warner Bros. announced that the highly anticipated ‘Game of Thrones: Build Your Realm Hero Box’ will drop on 10 January, 2023. The first Hero Box will include collectibles and avatars from the Northern regions of Westeros.

Doodles co-founder: Doodles 2 closed beta starts sometime in 2023 (Read more)

• Jordan Castro, co-founder of the Doodles NFT collection, announced in the official Discord that the Dooplicator first utility will be revealed in January 2023. The Genesis Box reveal will fast follow the Dooplicator. And Doodles 2 closed beta starts sometime in 2023.

BAYC and MAYC holders will get a free, playable, interactive mint experience in late January (Read more)

• The trial is the prologue to a series of activations coming over the course of next year.
• When it comes to the mint, Apes (BAYC or MAYC) who also hold a BAKC will be in tiers of their own. There will also be an optional $APE spend mechanic, for those looking to enhance their minting experience.

Bored Ape creator Yuga Labs nabs new CEO from gaming giant Activision Blizzard (Read more)

• Yuga Labs says Alegre will take the helm in the first half of 2023, and that the company’s first and current CEO Nicole Muniz will remain on the team as a partner and strategic adviser.

Onchain research shows Trump’s team mints 1,000 NFTs to their own wallet (Read more)

• According to Teng Yan, Trump’s team mints 1,000 NFTs to their own wallet and keeps lots of rare 1/1s, autographed ones for themselves.
• He suspects the team Trump commissioned to do the NFT found a way to profit from gaming the rarity distribution.

🏢 Institutional Adoption / DAO

CoinShares announces change of listing venue to Nasdaq Stockholm (Read more)

• CoinShares, Europe’s largest and longest-standing digital asset investment firm, announces the first day of trading on Nasdaq Stockholm’s main market.
• There is no offering or issuance of new shares in connection with the Company’s shares being admitted to trading on Nasdaq Stockhol

🧑🏻‍⚖️ Regulations

SEC calls FTT exchange token a security (Read more)

• FTX’s exchange token FTT was sold as an investment contract and thus is a “security,” the U.S. Securities and Exchange Commission said in a complaint filed, in a move that is sure to have a wide-ranging impact on the industry.

SBF granted highest ever pre-trial bail of $250M, released to parents’ home in Palo Alto (Read more)

• SBF stood before a magistrate in SDNY where he was granted bail and put under house arrest to undergo treatment for substance abuse.

Brazil’s cryptocurrency regulation set to become law at midnight on Dec 22 (Read more)

• The bill aims to regulate providers of virtual assets. If outgoing President Jair Bolsonaro doesn’t veto it by the end of the day, it will automatically become law.
• The proposed law also allows public institutions to hold crypto.

As crypto auditors call it quits, what will take their place? (Read more)

• As former popular proof-of-reserve audit firms Mazars Group and Armanino discard their crypto clients, the industry is left wondering who might fill the gap in the space. According to Binance, none of the big firms are yet willing to step up.
• The “Big Four” accounting firms — known to be Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers — are “currently unwilling” to conduct a proof-of-reserves audit for a private crypto company, a Binance spokesperson told Blockworks.

SEC doubles down on decision to reject Grayscale spot ETF (Read more)

• The Securities and Exchange Commission doubled down last week on its decision to reject Grayscale’s bid to launch a bitcoin ETF, repeating its stance that such products are prone to fraud and manipulation, court records show.

🌟 Follow us for more crypto updates, insights, web3 narratives, and upcoming educational contents and lessons:

• Discord: https://discord.gg/z2jcbpm89n
• Twitter: https://twitter.com/artisan_xyz
• LinkedIn: https://www.linkedin.com/company/artisan-xyz/M
• Medium: https://medium.com/@artisan_xyz
• Website: http://www.artisancollective.xyz/

The Artisan Narrative is an educational resource intended for informational purposes only. It covers all things Web3 and may discuss assets that the Artisan Collective, ArtisanDAO or writers have financial exposure to. Views are on ours own. None of Artisan Collective, ArtisanDAO, its registered entity or any of its affiliated personnel are licensed to provide any type of financial advice, and nothing on newsletter, website and social media should be construed as financial advice. Artisan Collective, ArtisanDAO, writers might also receives compensation from its sponsor; sponsorship messages do not constitute financial advice or endorsement.