Artisan – #22 Weekly: Mar 6 – 12 | Web3 Narratives

Circle Reveals $3.3 Billion Exposure to Silicon Valley Bank, ETH Denver 2023, Amazon launching NFT platforms, Cosmos liquid staking, Liquid Staking trends, Binance.US gets judge’s approval to buy Voyager Digital, Silvergate is shutting operations and liquidating after market meltdown……

🤔 Analysis & Thoughts

Everything you missed at ETH Denver 2023 (Readmore)

• The Axelar Interoperability Summit on Monday and Tuesday was all about connecting the worlds of Cosmos, all Ethereum L2s and L3s, and all the other chains too.
• The ZK Day on Tuesday centered around Zero-Knowledge tech. This event was an entire day-long event compared with 3 talks at ETH Denver 2018 and was dominated by representatives from Asia countries like China, Japan, and Korea.
• The WalletCon on Wednesday focused on wallets. Identity, messaging, cross-chain UX, and account abstraction were all huge topics here, and WalletCon hosted one of the biggest announcements of the week: ERC4337 deployed to the Ethereum L1.
• Gaming also had a huge presence at ETH Denver. There were many gaming PCs around the conference, all loaded up with high-quality games ready to demo. The sophistication of the games was high.

2023 crypto thesis (Read more)

• For the Ethereum ecosystem, EigenLayer will be the most important innovation for Ethereum. Blob transactions will not fix scalability issues. ZK-Rollups will not see significant traction in 2023, but Layer 3s will be the true competitors to Cosmos. Exclusive orderflow will be the most important problem to solve.
• For Cosmos, the current version of ICS will struggle in 2023. Mesh security will lead to validator centralization. Celestia’s DAS will revolutionize the development of blockchains.
• For DeFi, stablecoins & pegged assets will dominate. There will be more native cross-chain assets instead of wrapped assets. We will also see consolidation of power amongst a few players.
• 2023 will see major application level security upgrades & the decentralization of auditors. For NFTs, 2D liquidity turns 3D.

Overview and comparison of Cosmos liquid staking (Read more)

• Stride, Lido, pStake and Quicksilver have roughly the same liquid staking mechanism. They use interchain accounts (ICAs) that allow an address on one chain that is controlled by another chain.
• Stride and Lido plan to use interchain security (ICS) from the Cosmos Hub. The economic security of the Quicksilver and Persistence blockchains will be tied to the value of all staked QCK and XPRT.
• Stride protocol uses rate-limiting in two ways. But neither Lido, pStake nor Quicksilver have announced plans to introduce rate limiting.

Four trends in the LSD industry (Read more)

• DeFi integration: Liquid staking is becoming an essential part of DeFi. We can expect to see a wide range of innovative applications for LSD in DeFi, from index investing, aggregation, farming to leverage strategies.
• Permissionless node: users can run permissionless nodes and earn rewards as fees from protocol users, with no track record or performance history required.
• Multi-Chain: LSD will likely become the standard for any PoS blockchain in the future.
• Real yield: Holders of native tokens can earn a share of the protocol revenue. Liquid staking projects are fit for the real yield trend as they generate fees constantly.

🌍 Layer 1/2s

Jack Dorsey’s Block reveals plans for Bitcoin ‘Mining Development Kit’ (Read more)

• The company hopes to see developers integrate mining into heating solutions, off-grid mining, home mining, and intermittent power applications.

💰 DeFi / CeFi / NFTFi

Stablecoin Firm Circle Reveals $3.3 Billion Exposure to Silicon Valley Bank (Read more)

• Stablecoin giant Circle Internet Financial Ltd said $3.3 billion of its about $40 billion of USD Coin reserves remain at Silicon Valley Bank, which collapsed in one of the largest bank failures in US history on Friday.

Lido considers halting support for Polkadot and Kusama (Read more)

• A recent governance proposal suggesting the withdrawal from the two chains cited reasons including market conditions, protocol growth, limited capacity and priority alignment.
• This would affect close to $25M worth of DOT and KSM that users have staked on Lido, automatically unstaking the assets in June.

Silvergate is shutting operations and liquidating after market meltdown (Read more)

• Silvergate Capital announced on Wednesday that it will wind down operations and liquidate its bank.
• The firm has served as one of two main banks for the crypto industry, along with Signature Bank.
• All deposits will be fully repaid, according to a liquidation plan shared on Wednesday.

Distribution of tokenised on-chain bonds exceeds $1.5B (Read more)

• Financial institutions have increasingly started looking towards utilising blockchain for the tokenisation of real-world assets.
• Digital bonds offer greater efficiency and security for issuers, alongside a streamlined issuance process.

Babel Finance planning to issue a crypto-backed stablecoin (Read more)

• The Hong Kong crypto lender is planning to work with HOPE to repay its creditors following the $766M loss last year.
• According to a proposal, the stablecoin is planned to be backed by BTC and ETH.

🖼 NFT / 🎮 Gaming / 🎭 Metaverse

Hybrid liquidity lending protocol Sodium is live on Ethereum mainnet (Read more)

• Sodium offers an innovative solution for the NFT liquidity trilemma, combining the best of the P2Peer and P2Pool models.
• The protocol introduces a new loan request matching mechanic that allows every lender to participate with their own isolated terms and conditions.

Blur captures 84% of ETH-based NFT transactions in first week of March (Read more)

• Of all Ethereum-based NFT transactions during the first week of March, 84% took place on Blur according to data from the Block, surpassing February’s high of 68%.
• The NFT marketplace has quickly surpassed competitors using a strategy of low fees, airdrops, and token incentives.

Yuga Labs’ TwelveFold NFT collection fetches top bid of $160K (Read more)

• According to Yuga Labs, the auction saw 3,246 total bidders and generated about $16.5M worth of BTC.
• With the lowest bid around $50K, bids for a single NFT in the collection went as high as $160K.

🏢 Institutional Adoption / DAO / RWA

Amazon NFTs Will Be Tied to Real-world Assets, Token Possible (Readmore)

• Amazon is laying the groundwork to give its customers the ability to purchase NFTs tied to real-world assets that are delivered to their doorstep, according to three sources familiar with the matter.
• The move is a significant upgrade from the e-commerce giant’s earlier steps in developing its NFT platform, a move previously reported by Blockworks. And the company is planning to notify every Amazon Prime customer — at least in the US — of its digital collectibles initiative once it goes live, an additional two sources said. 

🧑🏻‍⚖️ Regulations

New York Attorney General Letitia James filed a lawsuit against KuCoin, arguing that ETH, just like LUNA and UST, is a speculative asset (Read more)

• New York Attorney General Letitia James continued her efforts to crack down on unregistered cryptocurrency platforms by filing a lawsuit against KuCoin for failing to register as a securities and commodities broker-dealer and falsely representing itself as an exchange. The Office of the Attorney General (OAG) was able to buy and sell cryptocurrencies on KuCoin in New York even though the company is not registered in the state.
• The petition argues that ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH.

Thailand waives crypto tax for investment tokens: Reuters (Read more)

• Thailand’s cabinet waives crypto tax for companies that offer investment tokens.
• The tax exemption could see the government forgo up to $1 billion in revenue over the next two years.

Binance.US gets judge’s approval to buy Voyager Digital despite regulator objections (Read more)

• Binance.US can buy Voyager Digital’s assets, a federal bankruptcy judge confirmed.
• Voyager’s restructuring plan is moving ahead eight months after the crypto lender filed for bankruptcy.

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