Top Stories of Last Week

Regulatory

  • U.S. Treasury Department reportedly preparing to clarify crypto entities that don’t meet tax code’s definitions of “broker,” with guidance on matter possibly coming next week. Treasury statement, which is not yet public, could provide workaround by effectively limiting bill’s scope to those classified as brokers under tax code and exempt non-broker parties on case-by-case basis.
  • Brian Quintenz plans to step down from role as CFTC commissioner on Aug. 31, and will announce role in private sector after departure. Rostin Behnam, acting chairman of Commodity and Futures Trading Commission since January, to be nominated to continue to lead as chairman.

Project Development

  • Polygon acquired Hermez Network, a ZK-Rollups-based Ethereum scaling solution, for $250 million, with two projects merging native tokens (MATIC and HEZ) in first ever such deal in crypto. 
  • Avalanche platform announced plans for $180 million liquidity mining incentive program to increase scale in DeFi. “Avalanche Rush” will bring top DeFi applications to platform, beginning with Aave and Curve.  
  • Audius, a music streaming platform based on Ethereum and Solana blockchains, partnering with TikTok on video-sharing app’s new “TikTok Sounds” library.
  • Ledger announced partnership with Ethereum staking solution Lido Finance in move that claims greater accessibility and liquidity for independent stakers. 
  • Fireblocks announced former U.S. SEC Chair Jay Clayton as member of board of advisors. Clayton will work on addressing market structure and customer needs, including support and deployment for firm’s security technology.

Institutional

  • Walmart looking to hire digital currency and cryptocurrency product lead, according to careers page advertising role that seeks to provide leadership with ways to identify technology and customer trends.
  • Alibaba Group Holding launched NFT marketplace allowing trademark holders to sell tokenized licenses to their intellectual property. “Blockchain Digital Copyright and Asset-Trade” can be accessed via Alibaba’s Auction platform, with NFTs launched via platform to be issued on “New Copyright Blockchain,” a distributed ledger technology platform centrally operated by Sichuan Blockchain Association Copyright Committee.
  • Galaxy Digital filed with SEC for exchange-traded fund that will invest in products with indirect exposure to Bitcoin.

Exchanges

  • Binance ordered by London High Court to trace perpetrators of $2.6 million hack upon request from Fetch.ai, an artificial intelligence company, who asked to identify and freeze accounts of hackers. Fetch.ai says hackers stole assets from Binance account before selling, and Binance confirmed it’s helping with recovery of funds. Also named former U.S. Treasury enforcement investigator Greg Monahan as global money laundering reporting officer. Lastly, Binance tightened customer verification requirements on platforms.
  • Coinbase partnering with Mitsubishi UFJ Financial Group to launch Coinbase Japan following greenlight from country’s financial regulators. Also announced it will be purchasing more than $500 million in cryptocurrency to add to holdings after receiving board approval to add assets to balance sheet. Coinbase will also invest 10% “of all profit going forward in crypto.” Additionally, regulatory documents regarding Coinbase revealed list of COIN holders such as Goldman Sachs, JPMorgan, CitiGroup, Bank of America, Millennium Management, BlackRock, Miller Value Partners, Bridgewater, and Tennessee’s Treasury. 
  • Liquid exchange announced wallets were compromised. Total amount stolen reported to be upwards of $74 million.

Fundraising

  • Bitpanda closed $263 million Series C funding round led by Valar Ventures, which values company at $4.1 billion. Alan Howard, REDO Ventures, LeadBlock Partners and Jump Capital also participated in round. Investment platform will use fresh capital on technology, international expansion and growth.
  • FinTech Collective raised $250 million for new strategy focused on DeFi. $200 million will be focused on early-stage investments, and $50 million will support open-source, financial protocols and applications being built on Ethereum.
  • MobileCoin, a privacy-oriented and mobile-first cryptocurrency project, raised $66 million in Series B funding round led by Alameda Research, Coinbase Ventures, and BlockTower Capital.
  • Blockchain infrastructure provider Figment raised $50 million in Series B funding round led by Senator Investment Group and Liberty City Ventures. Anchorage Digital, Galaxy Digital and 10T Ventures also participated.
  • Blockchain security firm CertiK raised $24 million in Series B+ funding round co-led by Tiger Global and GL Ventures. CertiK plans to further enhance security infrastructure and expand global team.
  • Yield Guild Games raised $4.6 mil in round led by Andreessen Horowitz, with participation from Kingsway Capital, Infinity Ventures, and Atelier Ventures.
  • Ondo Finance, a protocol meant to accelerate DeFi adoption among institutional investors, raised $4 million in funding round led by Pantera Capital. CoinFund, Protoscale Capital, The LAO and DCG also participated.
  • Hyperithm, a digital asset management firm, raised $11 million in Series B funding round co-led by Hashed and Wemade Tree. Other participating investors included Coinbase Ventures, Cocone, GS Futures and Guardian Fund.

Defi / NFT

  • Galaxy Digital launched passively managed DeFi index fund that tracks performance of Bloomberg Galaxy DeFi Index. Galaxy DeFi Index Fund offers exposure to decentralized lending and exchange platforms like Uniswap, Aave, Maker, Yearn and others.
  • Group of developers led by Paradigm’s Sam Sun prevented SushiSwap’s token fundraising platform Miso from losing more than $350 million worth of Ether after discovering and fixing bug on platform. Vulnerability existed on “Dutch auction” contract on Miso platform, allowing attacker to bid in auction for free.
  • Dolce & Gabbana will debut NFT collection on marketplace UNXD later this month. “Collezione Genesi” NFTs will feature items personally designed by Domenico Dolce and Stefano Gabbana, with collection to launch on Aug. 28.
  • 1inch Network expanded to Optimistic Ethereum mainnet, which is expected to help increase transaction speeds and lower gas fees.

Things to Watch This Week

  • Jackson Hole Economic Policy Symposium: August 26 – 28
    • The end of this week brings us the Jackson Hole Symposium, which should give us more clarity on the Federal Reserve’s agenda and how their actions will potentially affect both traditional and crypto markets. The latest FOMC meeting minutes show that a majority of Fed members support tapering, and that this should commence before year end. If Jerome Powell gives any hint of hawkish sentiment or indications of monetary tightening, equities and other risk-on assets should theoretically expect significant volatility to the downside. 
  • Bitcoin Futures / Options Expiry: August 27th
    • We’ll also face another month-end expiration of both futures and options markets for Bitcoin at the end of this week. BTC Futures Open Interest currently is at just over $18 billion at time of writing and total open interest for Bitcoin options sits at 36,362 BTC for the August 27th expiration, at a value of just over $1.8 billion. One thing to keep an eye on is Max Pain price for the Aug. 27th expiration sits at $42,000. The Max Pain theory states that the market will gravitate towards the price where the maximum number of options expire worthless, and thus offers the maximum pain to buyers of options. While this theory hasn’t factored in as much in recent expiration periods, it will still be important to monitor given that both of these events coincide with each other at the end of the week. 
    • Miss ₿itcoin@missbitcoin_mai
      It’s an awesome deepdive into the Metaverse and how it’s creating jobs for people around the world The Zima Red Podcast: Exploring the Metaverse and Virtual Economies
      yieldguild.substack.com/p/the-zima-red…

      jin@dankvr
      1/ I have some thoughts about the next phase of NFTs, gaming, social media, and story telling. Going to try to explain what an Internet Cinematic Universe (ICU) is. Btw you’re in one right now.

      2/ Story telling has been evolving from fictional worlds into transmedia universes. The most famous example is the Marvel Cinematic Universe (MCU).
      See: matthewball.vc/all/universeph…

      3/ These universes are now expanding into gaming, the fastest growing and “always on” medium. Biggest cross-over games: Left: Fortnite collabs and beyond that @Snowfoot_ and his friend made. Right: Smash Bros Ultimate story mode overworld.
      twitter.com/Snowfoot_/stat…

      4/ Now imagine the Internet as a game we’re all playing. Big difference between this and other CU’s is that we all have presence / digital real estate here. It is our shared universe we live, work, play in.
      Map of online communities by @xkcd, more maps: hackmd.io/@XR/maps

      5/ Abstract stories help us understand the increasing complexity (intersubjective). The myths we create are about as interpretive as cloud watching or constellations in the sky, aka bottom-up.
      READ MORE

      Zen@Zen_Trades1
      NFTs are exploding. @zhusu and @kyled116 of 3AC are on a spending spree. @Vince_Van_Dough isn’t slowing down. Why? Think BIG! A long-term investment thesis for NFTs and Generative Art

      1. What’s happening today? Beeple, Crypto Punks and Generative Art are all part of a defining moment in the history of art, culture and technology. The problem of provenance for digital art and collectibles has been solved. Legitimacy has arrived.

      2. What comes next? The logical next step is an NFT-themed exhibition at a top-tier gallery like the @MuseumModernArt 
      They’re well known for digital art exhibitions https://moma.org/calendar/exhibitions/5033… Their curators are discussing NFTs
      https://moma.org/magazine/articles/547
      READ MORE

      SpartanBlack@SpartanBlack_1
      1) Had dinner with a bunch of tradfi investors this week who have gotten into crypto and are excited about it. Over dinner someone asked an interesting question: “who is subsidizing all of this wealth creation in crypto? The money must come from somewhere.”

      2) My short and somewhat unintuitive answer: “everyone else who is not in crypto”. It’s the other 99% supporting the 1% and the funny thing is that they have no idea they are doing it.

      3) How? Consider the thousands of new millionaires minted in crypto (not to mention the billionaires) are going to cash out a portion of their newfound wealth to buy houses, cars, yachts, jewelry, club memberships etc
      READ MORE

      Larry Cermak@lawmaster
      Gensler’s comments on regulating DeFi. “Projects that reward participants with valuable digital tokens or similar incentives could cross a line into activity that should be regulated, no matter how “decentralized” they say they are.” wsj.com/articles/crypt…

      If they actually try to enforce this and go after the devs and founders, it will just push all the teams to move outside of the U.S. permanently and encourage more anon development. Not much more they can do honestly

      Tascha@RealNatashaChe
      #Bitcoin fails as a money b/c of its naive monetary policy. Many people think government printing too much is evil, so a fixed money supply must be good. The reality: a money that cannot expand would crush the economy and put us all in poverty. Here’s why and how to fix it.

      To see this we need to understand why monetary deflation and expanding economy do not go together. Let’s simplify so it’s easier to see. Say, we have an economy with 1 product— twinkie, and 1 currency— dollar. Price of 1 twinkie = $1.

      Alice, a twinkie entrepreneur, hires Bob to help make twinkies. Alice’s company makes 1 twinkie a year, so company revenue is $1. Bob’s salary is $0.5 and Alice takes the other $0.5.

      What happens when productivity goes up (a.k.a. economy grows)? When prices/wages are stable, Alice is always motivated to find better ways (read: new technology) to make twinkies (read: increase productivity).
      READ MORE

      CoinDesk Research@CoinDeskData
      .@AxieInfinity has surpassed more than $1 billion in sales and one million daily users. Up until last week, @opensea was the sole NFT platform to break the threshold of $1B in cumulative traded volume.
      Report by @intotheblocktrib.al/PUIaobV
      CoinDesk Research@CoinDeskData
      While centralized exchanges such as @krakenfx and @binance continue to command a significant share of total Ethereum 2.0 stake, they appear to be losing share to decentralized staking alternatives such as @LidoFinance.
      Report by @nansen_aitrib.al/USLAQOJ

      Eric Balchunas@EricBalchunas
      Burry makes bearish bets on $ARKK. Scoop via @SamJPotter

      Cathie Wood@CathieDWood
      Most bears seem to believe that inflation will continue to accelerate, shortening investment time horizons and destroying valuations. Despite what we believe has been a supply-chain related/short term burst in inflation, both equities and bonds have appreciated since March

      Unlike the tech and telecom bubble, this equity bull market has broadened beyond the innovation strategies that boomed last year to value and other stocks that had trailed. The bull market has strengthened, setting the stage we believe for another leg up in innovation strategies.

      The equity market is likely to reward disruptive innovation strategies once again when headline inflation breaks and/or fears of recession increase. If the bond market is correct, one or both will be obvious during the next 3-6 months.
      READ MORE

      samczsun@samczsun
      Auditor’s logs, 16th of August. I found a critical vulnerability in SushiSwap’s MISO platform
      READ MORE
      Zhu Su@zhusu
      Conditions are v different now vs prev “covid dump”
      1) We had insane contango (over 100%+ p.a.) going into Mar 2020, everyone trying to frontrun the halving
      2) Weak hands already flushed now in the longest sideways in crypto history
      3) Deriv OI as % of mcap much lower

      cyrus.ismoney.eth @cyounessi1
      Why is it always the VCs who completely ignored / missed / didn’t profit from the rise of ETH that shill the ETH killers. I can name like 10 off the top of my head who were publicly bearish ETH now constantly pumping the competition

      I’d have much more of an open ear towards a VC who was long ETH (appropriately mega-sized) from $10 to $3000 who tells me to start looking into these other chains. But so far: 0 overlap between the two camps.

      If you didn’t understand then (or still don’t) why ETH and smart contracts were huge, you won’t understand now why the ETH killers won’t gain real adoption. Hint: it has extremely little to do with scalability or UX. ETH (and BTC) thrived DESPITE being slow with clunky UX. Few.

      I think posting the thread did help me understand the crux of my triggered-ness. It seems like a lot of *very large* investors are (selfishly) gaslighting the broader crypto community into accepting that these chains are **sufficiently** decentralized.
      READ MORE

      Tascha@RealNatashaChe
      Ethereum will be the new government bond. Staked ETH, or PoS asset of a dominant blockchain, will replace US Treasuries as the risk-free asset in any portfolio. This shall be the biggest revolution in the history of financial markets. Here’s how I think it’ll go down

      First, how does a “risk-free asset” come to be? There’s no guarantee in life. Everything has risk. An asteroid can hit earth tomorrow and we all die. But in practice, people take the debt issued by the US government as a benchmark, risk-free asset, because—

      Governments collect taxes. The US has the largest, most robust economy in the world. The US government has the largest, most robust incomes. It literally just takes a cut of the US GDP every year.

      When you buy US Treasuries, you’re indirectly taking a share of the US GDP. You can fuss about whether US is issuing too much debt, if yield is artificially low, if monetary policy is over indulgent, yada yada yada…

      But at the end of day, investment risk in US Treasuries is still lower than anything else out there. That’s why people take it as the risk-free asset. Every other bond, stock, and property look to US Treasury yield as a basis of their pricing.
      READ MORE