22 January

“The crypto market was in a sea of red on Friday as bitcoin, the world’s largest cryptocurrency by market capitalization, tumbled more than 10% over the past 24 hours. Alternative cryptocurrencies (altcoins) led the way lower given their higher risk profile relative to bitcoin.

The total market cap of the cryptocurrency industry has fallen 11% to $1.9 trillion as of Friday afternoon U.S. time from an all-time high of $3.1 trillion in November. There has been nearly $600 million in liquidations during the last 12 hours. Bitcoin led the liquidation pack at $250 million, followed by ether at $163 million.

It appears that global investors have entered the year with a reduced appetite for risk, and so the correlations between speculative assets such as cryptocurrencies and equities have increased, which results in widespread losses. Bitcoin is down roughly 40% from its all-time high of almost $69,000, while the S&P 500 is down about 7% from its peak, compared with a 10% drawdown in the Nasdaq 100 Index.

We expect BTC to find a bid around the $35K mark, close to 50% from the top. In the short term, we can bounce to challenge the $45K-$50K zone, but the overall outlook remains bearish as liquidity remains tight.

Many altcoins are into support at their summertime 2021 lows, making it critical that bitcoin holds support as it sets the tone for the cryptocurrency space.

For now, technical indicators show nearby support at about $37,000 for bitcoin, although stronger support at $30,000 could stabilize a deeper correction.”

See Also: El Salvador Purchases 410 More Bitcoins Amid Market Drop, President Bukele Says
See Also: Crypto Twitter responds to Bitcoin dump: ‘Ok cool’
See Also: Crypto Trader Tantra to Liquidate After ‘GBTC Discount’ Widens to Record

“The world’s largest cryptocurrency by market capitalization began to drop Thursday around 19:00 UTC (2 p.m. ET), following the lead of the equity market, which saw a sharp decline into the U.S. 4 p.m. close. Here’s what analysts are saying is behind the fall in price:

1. BTC is moving in conjunction with traditional markets

Bitcoin and the broader cryptocurrency market as a whole is acting as a high-sentiment beta asset – meaning it is moving in tandem with the broader markets and is more impacted by the recent negative sentiment. Macroeconomic fears and poor technology company earnings have also exacerbated this correlation.

2. Leveraged long positions

Leveraged long positions exacerbated the sell-off into the Asian open on Friday. $40,000 was an important support which has now turned into a resistance level.

3. Negative market sentiment

Bitcoin’s (BTC) fall in price is a simple continuation of the same trend that has been occurring in the last few weeks – negative market sentiment. Once fear sets in, it takes a while to break and you simply have to wait for capitulation before you can move back to “normalized” ranges.”

Mining difficulty on the Bitcoin network increased by 9.32% and hit an all-time high of 26.64 trillion on Jan. 21, beating the previous record set on May 13, 2021.

Most miners from China estimated they would come back online in Q1 2022, so ‘we can attribute a good bit of this increase [in difficulty] to Chinese miners finally coming online in North America.’ Given the soaring price of bitcoin last year, miners booked “super profits,” so they tried to get more mining capacity online as fast as possible. Analysts and industry insiders expect the trend to continue well into 2022.

From July 2022 to December 2022, most of the largest miners have enormous deliveries of the Antminer’s newest ASIC Antminer S19 XP. These deliveries will make the difficulty soar throughout the whole 2022.”

“The role – “Senior Product Manager, Crypto,” – has a special focus on “creator monetization.

In this capacity, we’ll be looking closely at NFTs and NFT tooling, membership tokens, DAOs and more!

The announcement comes as Twitter ventures further into the realm of Web 3, perhaps to the chagrin of founder Jack Dorsey, an avowed bitcoin maximalist. Notably, the Twitter job post lists collaboration with Bluesky, the company’s decentralized social media initiative.

Yesterday, the company rolled out NFT verification services to those who pay $3 a month for its Twitter Blue service.”

The only real “ETH killer” might end up being Ethereum 2.0, according to analysts at Coinbase Institutional, which provides cryptocurrency research to big investors.

Ethereum’s layer 2, or companion system, which works alongside the main blockchain to speed transactions at lower cost, may help to stave off competition from other layer 1, or base layer, protocols. Planned upgrades to Ethereum itself, such as a full transition to a proof-of-stake blockchain from the current proof-of-work system as well as the introduction of sharding may also help.

As the ecosystem’s scalability improves, users of decentralized applications, or dapps, may refrain from looking for faster and cheaper alternatives to Ethereum. The development is likely to narrow layer 1 alternatives’ opportunities in the second half of 2022, according to the Coinbase analysts.

We do think that the culmination of [layer 2] scaling solutions combined with upgrades like the Beacon Chain merge and sharding could limit progress for alternative [layer 1s] in their current form.”

Ethereum Arbitrum Tutorial! Use Crypto Defi: Uniswap and Curve Finance

Britain has been lagging behind, particularly when it comes to crypto, according to some industry watchers. Meanwhile, the U.S. is seeing fintech firms with $100 billion valuations going public. ‘The global race has started and the U.K. is getting left behind.’

The U.K. has focused only on risk, and perhaps missed the big picture. We need to ensure that regulation keeps pace with the rapid advancements in technology.

We will lose a lot of innovators in the U.K. if this FCA rhetoric continues. Right now the word on the street is don’t set up in the U.K.”

21 January

Link your Ethereum wallet to your Twitter account, and you’ll be presented with a list of NFTs you own. Choose an NFT, and your profile picture – typically enclosed within a circle – will get a nifty new hexagonal border. If a pesky right-clicker tries to use your NFT as their profile picture without first buying the token, they will still be able to use the image, but they will be stuck with the classic circle frame.

Twitter’s NFT verification process is both a bid to keep crypto enthusiasts on the platform and an explicit rejection of former CEO Jack Dorsey’s “Bitcoin-only” philosophy. Verification is available only for Ethereum-based NFTs, at the moment, though a representative for the company clarified that this is only the “first iteration” of a feature that may go on to support other blockchains.

For now, NFT verification is available only for users with Twitter Blue, the company’s $2.99-a-month subscription service. For NFT fans, it may be a price worth paying.”

See Also: Meta reportedly plans to integrate NFTs on Facebook and Instagram profiles

“The U.S. central bank believes the current financial system might be bolstered by the creation of a central bank digital currency (CBDC), but only one that works within the current network of private banks, rather than a CBDC that the Federal Reserve issues directly to consumers.

Officials haven’t yet committed to issuing, or even developing a digital dollar, and the document underscored how far away such decisions remain. Still, it shed considerable light into what would make a hypothetical CBDC successful for the U.S.

The Federal Reserve’s initial analysis suggests that a potential U.S. CBDC, if one were created, would best serve the needs of the United States by being privacy-protected, intermediated, widely transferable and identity-verified.

The intermediaries could be commercial banks or other nonbank payment entities. In other words, the Fed does not want consumers setting up personal accounts at central bank locations to access these CBDCs, but rather, would prefer that existing banks and similar financial firms maintain their role.

Moreover, the Fed wants “clear support” from both the executive branch of the federal government and Congress before it will issue a CBDC, “ideally in the form of a specific authorizing law.” Public comments are open for the next 120 days.

Senator Pat Toomey said he was “encouraged” by the report’s noting it needs Congressional support before the Fed would issue a CBDC, as well as the Fed’s note that it would not directly offer retail accounts. The lawmaker did raise concerns about the privacy aspect of the Fed’s CBDC proposal however.

While the report mentions the importance of CBDC privacy, I’m concerned the Fed does not clearly explain how it would protect consumer transaction data. There’s also a question in my mind whether the Fed’s report implies that a CBDC would not allow for direct peer-to-peer transactions. This characteristic is fundamental.”

“Five industry experts appearing before the United States House Energy and Commerce Oversight Subcommittee had different views on how lawmakers should address the energy consumption of cryptocurrencies.

Former Comptroller of the Currency Brian Brooks argued that the energy consumption of Bitcoin (BTC) mining was “economically productive,” given other assets including gold required roughly the same amount of energy for mining, with “a host of other environmental concerns.” In addition, Brooks said that the traditional global banking system consumed roughly 2.5 times the amount of power to produce the same amount of value BTC does at its current market capitalization.

Cornell Tech professor Ari Juels, who has often been a critic of crypto mining as it currently stands, was supportive of the crypto space as a whole but argued in favor of “energy-efficient alternatives” rather than the proof-of-work (PoW) common for mining. He added that the Ethereum blockchain’s transition to proof-of-stake (PoS) would likely consume “far less electricity.”

Steve Wright hinted that mining firms should consider “mechanisms to assure cryptocurrency production is encouraged toward efficient outcomes as early as possible.”

If policymakers take a cautious approach and foster a pro-innovation environment, the rewards for consumers, investors and all Americans are likely to be great.”

See Also: Live Blog: Congressional Hearing Puts Crypto Energy Use in the Crosshairs

BTC Bull Setup Spoiled

“Andreessen Horowitz (a16z), a venture capital firm that has invested extensively in the crypto industry, is looking to raise $4.5 billion for new funds.

The new crypto fund would be the industry’s largest, overtaking the $2.5 billion raised by Paradigm in November.”

See Also: Agoric Raises $50M in CoinList Token Sale to Bring JavaScript Developers Into Crypto
See Also: Shakepay Raises $35M to Help Canadians Buy, Sell and Earn Bitcoin

“I’ve asked staff to look at every way to get these platforms inside the investor protection remit. If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable. What we want to do is provide some of the basic protections against fraud and manipulation.

His comments come amid yet another crypto-related hack. Earlier today, crypto exchange Crypto.com confirmed the exchange lost almost $34 million to hackers.”

See Also: SEC Rejects First Trust SkyBridge’s Spot Bitcoin ETF Proposal
See Also: FINRA Considering Changes to Crypto Regulations to Better Protect Investors: Report

“Italian luxury fashion house Prada and sportswear giant Adidas, which recently ventured into the metaverse, have joined forces to launch a new non-fungible token (NFT) project built on the Polygon network. The project will allow fans to contribute their own designs.

From Jan. 24, fans will be able to register with a digital wallet to create and mint NFTs by submitting a photograph. The project will then choose 3,000 contributors who will also own IP rights to their individual NFTs and be able to take part in the drop later that week.

Prada sees the emergent metaverse as a new space for the brand to re-define luxury for the next generation and cultivate shared experiences that honor the brands’ spirit of experimentation and creativity.

Luxury fashion brands are already making millions of dollars from auctioning off NFTs. In September, Italian haute couture label Dolce & Gabbana launched its NFT collection, Collezione Genesi, which fetched approximately $5.65 million in a sale.”

See Also: Jefferies Sees the NFT Market Reaching More Than $80B in Value by 2025
See Also: Bud Light Owns a Nouns Ethereum NFT—And May Use It in Super Bowl Ad

“The report says cryptocurrencies are volatile and widely used in illegal activities such as fraud. The bank, therefore, said Russia needs new laws and regulations to effectively ban crypto-related activities.

Miners said the stance was not a surprise. The report is a reiteration of the bank’s existing position, and final policy is likely to include input from other stakeholders. The probability of a complete ban of the entire cryptocurrency industry is “negligible.”

The crypto market also seemed unperturbed. Bitcoin was trading about $43,000 at publication time, up more than 3%.”

See Also: El Salvador explores low-interest loans backed by Bitcoin

“Larimer, who quit Block.one – EOS’ now-estranged mother company – last January, is ratcheting up technical contributions to the software he spearheaded in 2017. In return, EOS Network Foundation (ENF) – now the ecosystem’s de facto shot caller – will bankroll Larimer’s development work with token grants in its native EOS.

Larimer’s “Mandel” upgrade is a hard fork that would give ENF effective control of the EOS codebase – and thus the network’s power seat – if validators adopt it in the second quarter.

Team leads say fully severing ties with Block.one is the first step. The company that conducted EOS’s $4 billion token sale in 2017 had long since shifted its focus and funding – and even its vested EOS tokens – to the crypto exchange Bullish, which is preparing to go public through a special purpose acquisition company (SPAC).

B1 essentially transferred their assets to a new company, which feels like the ultimate rug.”

Bloomberg: From Bitcoin to DeFi (in 12 Short Years)

20 January

“Just three months after abandoning a strategy to let Google Pay users create checking and savings accounts via its proposed Plex service, the search and advertising giant will wade more deeply into other financial services—including cryptocurrency debit cards.

Crypto is something we pay a lot of attention to. As user demand and merchant demand evolves, we’ll evolve with it.

While Ready told Bloomberg that Google isn’t ready for crypto transactions just yet, it’s clear that it’s a part of the strategy moving forward.”

“On Jan. 18, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, sounded the alarm on global markets’ “up only” narrative.

As the Fed attempts to rein in inflation and dramatically decrease asset purchases, the outlook is thus much less appealing for risk assets in the near term. For McGlone, however, there is a silver lining when it comes to Bitcoin’s inherent appeal: ‘I think it’s transitioning from a risk-on to a risk-off asset.’

Here’s my prediction: The markets pull back finally, and we get a 10%–20% correction in the stock market. All correlations are one, which is usually the way it works. Bitcoin comes out better off for it.”

See Also: 2 key Bitcoin trading indicators suggest BTC is ready for a 62% upside move
See Also: Bitcoin Stabilizes; Analysts See Relative Value in Altcoins

“Associate law professor and member of the Securities and Exchange Commission’s Investor Advisory Committee J.W. Verret is calling for the government agency to open for public comment in regards to digital asset regulation.

In a petition addressed to SEC Secretary Vanessa Countryman, Verret said opening the floor to comments on digital assets could function as a ‘Genesis Block’ for the SEC to reform its regulations on digital assets.

The SEC’s present course appears to be one designed to strategically bring cases using the Howey test as a weapon against tokens (and token trading services and technologies), which cannot reasonably be registered as securities (or securities exchanges) under the regulations promulgated pursuant to the ‘33 and ‘34 Acts, even if they wanted to and were required to do so (despite neither necessarily being true). I believe this is ultimately a losing strategy for the SEC as an institution.

According to Verret, the current regulatory path the SEC is taking seems not to recognize that ‘digital assets, by their very design, do not fit within the classic framework of regulations designed for equity investments in firms led by boards of directors.’ The law professor also criticized SEC chair Gary Gensler’s approach of asking crypto projects to “come in and talk to us,” saying many could be concerned that ‘engaging with the SEC may make their project the next enforcement target of the SEC.’

This Digital Asset Reg Genesis Block can commence an interactive process that can make securities regulation more flexible, more robust and ultimately better protect investors.”

Erik Thedéen said EU regulators should nudge the crypto industry towards the less energy-intensive proof-of-stake mining, in an interview with the Financial Times.

The solution is to ban proof-of-work. Proof-of-stake has a significantly lower energy profile.

The EU does not currently account for a particularly significant share of the proof-of-work mining industry. Bitcoin mining is currently dominated by the U.S. (share of 35.4%), Kazakhstan (18.1%) and Russia (11.23%).”

See Also: The House Looks Into Crypto’s Energy Impact

“Opera has launched the beta version of its “Crypto Browser Project,” an internet browser with built-in Web 3 integrations. The product is targeted at both “the crypto-native and the crypto-curious,” with Opera’s own crypto wallet at the core of its user experience.

The main feature of the browser is that users can switch between applications without having to sign into their wallets for every new tab, which will work for any app that has an Opera wallet integration.

While the current Opera wallet is exclusively compatible with Ethereum, the company plans to roll out Polygon and Solana compatibility in the near future, with a “biglLayer 2 announcement” coming in February.

We actually believe that browsers will be more important in Web 3 than they were in Web 2.”

See Also: Number of ‘Active’ Blockchain Games Doubled in Past Year to Almost 400

“Gemini announced the launch of Gemini Prime, which aims to simplify trading for institutional investors by providing access to multiple exchanges and over-the-counter liquidity sources. Gemini Prime, which is already being used by a select group of clients, will be fully rolled out in the second quarter.

A growing number of institutions have expressed a desire to provide crypto services, not least due to demand from their wealthy clients. Last May, Swiss financial giant UBS Group said it was looking for ways to offer exposure to crypto, and a survey in July found that 82% of institutional investors expect to increase their exposure to digital assets by 2023, with four out of 10 expecting to do so dramatically.”

See Also: FDIC-Backed Banks Send Stablecoins in USDF First
See Also: THORChain brings DeFi yields and swaps to DOGE

“Although token prices for leading blockchain games like Axie Infinity have fallen recently, the user metrics are up. There are now 398 active blockchain games, defined as having at least one active wallet in the past 24 hours within the game. That’s a 92% increase from a year ago.

User statistics show the rapid pace of adoption of blockchain gaming. According to Massoit, the number of daily unique wallets interacting with game-related smart contracts surged to 1.3 million last year, a 46-fold increase over the 28,000 at the end of 2020.

Meanwhile, venture capital firms have invested $4 billion to support the development and creation of blockchain-based games and their underlying infrastructure. And the fast expansion shows few signs of slowing.”

“The Hedera Governing Council has officially voted to purchase the intellectual property rights to the hashgraph consensus algorithm from founding architect and inaugural member of the council, Swirlds Inc, for an undisclosed fee.

A Wednesday announcement also details plans to transition their code to an open-source model this year under Apache 2.0 license, in addition to deploying community staking and node opportunities, among other updates.

The governing council is composed of 25 corporations, including Google, IBM, Tata Communications and Boeing, who each support the project’s decentralized ambitions through the establishment and operation of blockchain nodes, and participating in governance voting.

The decision to enact this change came about following conclusive technical assessments that the probability of a network split within the Hedera ecosystem is highly unlikely, and therefore the patent upholding legislative exclusivity to the technology can be safely distributed into the public domain, with assurances that it will not serve as an advantageous tool for market competitors but rather a mechanism to foster internal growth.”

19 January

“Futures markets remain a powder keg for short-term volatility with Perpetual Futures Open Interest at ~250,000 BTC- a historically elevated level. Since April 2021, this has paired with large pivots in price action as the risk for a short or long squeeze increases, resolved in market wide deleveraging events.”

See Also: Cryptocurrencies Decline With Equities, Traders Remain Cautious

Payments platform Cash App is making the Bitcoin Lightning Network available to customers in the United States over the next few weeks.

Customers can send Bitcoin internationally from Cash App to any external compatible wallet to a friend, family members, a self-managed wallet, or any merchant that accepts Lightning Network payments, with zero fees.”

The partnership will see Coinbase working with Mastercard to classify NFTs as “digital goods,” which will, it claims, enable “a broader group of consumers to purchase NFTs.” The crypto exchange also promised to “unlock a new way to pay using Mastercard cards.”

Buying digital goods should be as simple as buying a T-shirt or coffee pods on an e-commerce site.”

See Also: NFT Marketplace OpenSea Acquires DeFi Wallet Firm Dharma Labs

“Bankhaus von der Heydt was formed in 1754 and has in recent years become one of the first regulated institutions in Germany to offer digital asset services. The German bank offers cryptocurrency trading and custody, the latter through technology provider and crypto unicorn Fireblocks.

The planned purchase forms part of BitMEX’s strategy to create a one-stop shop for regulated crypto products in Germany, Austria and Switzerland.”

Microsoft shook up the video game industry this morning, announcing that it will acquire publisher Activision Blizzard—the company behind Call of Duty and Warcraft—in a deal valued at $68.7 billion. And Microsoft says that it’s a move made in anticipation of the metaverse.

Gaming is the most dynamic and exciting category in entertainment across all platforms today, and will play a key role in the development of metaverse platforms.

Microsoft has been involved in the crypto industry for years, announcing an alliance with Ethereum software technology company ConsenSys back in 2015. Microsoft’s M12 venture fund also recently invested in Palm NFT Studio, and has released free educational NFTs around its hit game Minecraft, as well as promotional NFTs around last year’s Windows 11 launch.”

“The latest structured-finance alchemy from the crypto industry allows traders to get exponential returns on the price of ether (ETH). Last week, the decentralized options protocol Opyn launched an ether derivative contract linked to a new index called Squeeth – a word play on “squared-ether.” The index tracks ether’s price change, raised to the power of two.

The basic purpose of the new tool is to give traders exposure similar to the highly leveraged bets they could get from trading options, but without the need to set strike prices or determine contract expiration dates.

Squeeth turns the options trade into a perpetual contract and can be used as a hedge. On the long side – betting on price upside – the trade offers leverage without liquidations. Traders who take the short side – betting on prices to stay range-bound – can collect premium yield.

A key drawback is that Squeeth funding rates – the cost of holding long positions – are expected to be higher than a 2x leveraged position due to the product’s exposure to pure convexity.

The ideal market condition to hold Squeeth is when a trader has conviction in the upward price movement of ETH in the short- to mid-term.”

“Red Date Technology, the architect of China’s internet of blockchains, is working with the Shenzhen Municipal Government and Singapore’s Infocomm Media Development Authority (IMDA) to build the blockchain-based Transnational Trade Network (BTTN).

Using the BTTN, companies will be able to transfer trade data between countries and firms, while adhering to local data privacy and security laws. Much like with the Blockchain Services Network (BSN), Red Date envisions the BTTN as a fundamental piece of the future global blockchain architecture.

Just like with the BSN, Chinese companies won’t have access to permissionless chains, which allow anyone to join, to comply with Chinese regulations. Using the BSN’s interoperability technology, the BTTN will allow for permissioned and permissionless chains to interact.

Chinese data centers, like the one in Shenzhen, will host “a corresponding permissioned system-level chain for each public chain,” the white paper said. One such chain is dubbed the “Ethereum Access Chain.” With that, Chinese firms will be able to pay for gas in fiat currencies, while a permissioned chain records data to comply with Chinese law.”

18 January

“While 2020 and 2021 are considered the years of bitcoin’s institutional adoption, in a new report Fidelity Digital Assets wrote that 2022 might be the era of adoption of bitcoin by sovereigns.

As more countries adopt bitcoin, other countries will be forced to as well even if they don’t believe in the investment thesis or adoption of bitcoin.

An outright ban will be difficult to achieve at best, and if successful, will lead to a significant loss of wealth and opportunity.

We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers.”

“Walmart filed seven trademarks at the end of December that signal its plan to make and sell virtual goods in the metaverse.

According to one of those filings, the big-box retailer also is exploring whether to offer users a cryptocurrency along with NFTs.”

See Also: Propy rallies 227% as real estate NFTs become reality and PRO lists at Coinbase

While the bitcoin options market has recently shed its bearish bias, some analysts remain unconvinced about the strength of the move owing to weak institutional demand and the cryptocurrency’s sensitivity to macro factors.

A good barometer is always the asset under management and inflows into crypto exchange-traded products and ETFs. So far we have recovered only $1 billion of inflows versus $4 billion that has left these products alone in January.

Amber Group said a continued rise in real or inflation-adjusted interest rates poses the biggest downside risk to bitcoin and risk assets, in general.”

See Also: Technical Indicator Points to Bitcoin Price Bounce

The firm is eyeing mobile gaming as the industry’s next big area of growth, hiring Steve Cho as its latest partner to help lead the fund in the right direction. Cho joins Mechanism Capital from Apple, where he led business efforts “to better understand NFTs and blockchain gaming” for the App Store.

Originally founded with a focus on decentralized finance (DeFi) in August 2020, the firm pivoted to blockchain-based gaming after a slew of home run investments in the sector, including metaverse platform Star Atlas, play-to-earn Ember Sword and guild giant Yield Guild Games.”

Arif Alvi, currently serving as the president of Pakistan, called for additional training in emerging technologies including blockchain, artificial intelligence and cybersecurity while meeting with a delegation of blockchain technology experts.

In a Monday announcement, Alvi said Pakistan’s talent pool should be ready to meet the needs of the Fourth Industrial Revolution, which includes utilizing blockchain technology in the public and private sectors.

Pakistan’s federal ministries of finance and law have not legislated on a potential blanket ban of cryptocurrencies in the country, but the State Bank of Pakistan has reportedly argued cryptocurrencies like Bitcoin (BTC) are illegal and cannot be used for trading.

A report released by crypto analytics firm Chainalysis in October 2021 showed that Pakistan had the third-highest rate of crypto adoption behind Vietnam and India.”

See Also: Pakistan’s Crime Agency to Ask Telecom Authority to Block Crypto Websites: Report

The Disrupt Weekend

“Numbers compare performance in Q4 2020 to Q4 2021.

Protocol Summary:

  • Network Revenue rose 1,777% from $231.41 million to $4.34 billion.
  • Average Daily Active Addresses grew 35% from 425,636 to 572,700.
  • ETH Inflation Rate fell 64% from 1.13% to 0.46%.
  • ETH Staked increased 471% from 1,545,486 to 8,818,933.
  • Average Transaction Fee rose 557% from $4.09 to $26.89.

Ecosystem Summary:

  • DeFi TVL grew 770% from $17.73 billion to $154.20 billion.
  • DEX Volumes rose 495% from $48.97 billion to $291.53 billion.
  • BTC on Ethereum grew 133% from 138,190 to 321,730.
  • OpenSea Sales increased 50,078% from $71.57 million in $35.91 billion.
  • Layer 2 TVL increased 11,002% from $50.01 million to $5.55 billion.”

GridPlus has developed a universal system for securely and privately transferring any cryptoasset off-chain: Phonon. Phonon is Satoshi’s “Digital Cash” vision realized. The protocol enables secure, instant, privacy-preserving cryptocurrency transactions.

With the Phonon network, any cryptocurrency gains the same properties as the cash you might now hold in your pocket. Asset transfers are instant, private, free, and secured using a peer-to-peer network of secure devices. Phonon works with any blockchain, but the token and protocol governance framework are built on Ethereum.

The initial implementation of direct P2P off-chain transactions is uniquely useful on its own, but it will be an effective foundation for more ambitious applications such as:

  • Instant L1← →L2 withdrawals and cross-L2 transfers. Liquidity providers with secure hardware can provide fast exits to users for a fee, without the need for challenge periods and fraud proofs. This is an ideal solution for cross-chain and cross-layer communications because it does not dilute economic security or rely upon a third-party validator set. It is hardware secured and instant.
  • Private, fully trustless, cross-chain DEX. Using the same approach employed for cross-layer fast exits, Phonon can provide the foundation for a privacy-preserving cross-chain DEX. There is an opportunity for the DAO to develop such a DEX on its own or integrate the technology into an existing protocol.
  • Integration of Phonon into Telecommunications and IoT Networks. Any device with a compatible secure chipset will be able to leverage the Phonon Protocol for fast, private, secure P2P value transfers. Future iterations of the protocol could support cellular telephones via existing networks or via a P2P mesh.
  • IoT Micropayments. Phonon was originally conceived to support cost efficient IoT micropayments and even the initial iteration of the protocol combined with Lattice1 hardware opens up a host of possibilities for automated pay-as-you-go payment streams.

The initial implementation of the Phonon spec is a developer-focused alpha that works with smartcards and any third party USB card reader. Github repositories for a Phonon client and the Phonon Javacard applet are now public. With these starting points, developers will be able to begin experimenting with their own implementations and uses for the protocol.”

“Celer IM fundamentally changes how multi-blockchain dApps are built and used. Instead of deploying multiple isolated copies of smart contracts on different blockchains, developers can now build inter-chain-native dApps with efficient liquidity utilization, coherent application logic, and shared states.

Users of Celer IM-enabled dApps will enjoy the benefits of a diverse multi-blockchain ecosystem with the simplicity of a single-transaction UX, without complicated manual interactions across multiple blockchains.

By making cross-chain composability possible, the Celer IM framework opens up an entire galaxy of opportunities for inter-chain-native applications. Celer IM is currently live on testnet.”

Rollups need new token models, and currently-deployed models have shortcomings. There are many benefits to protocol tokens, e.g. they allow incentivizing liquidity, and can create an engaged community. However, they are not without downsides—and those downsides can potentially make a token worse-than-useless.

One of the key properties of rollups is trustlessness. Rollups are secured by Ethereum, not a separate miner/validator set, and this is a key distinguisher between rollups (layer-2) and normal sidechains (not layer-2). With that in mind, here are some suboptimal token models that should be avoided:

  • A Proof-of-Stake (PoS) token, where a majority of validators sign off on blocks. This allows a majority of validators to censor new blocks, meaning user funds can be frozen. There is no need for PoS to secure a rollup, because a rollup is secured by Ethereum.
  • A fee-paying token, where users must pay fees in the token. For non-sovereign layer-2 protocols (like rollups on Ethereum), this is worse-than-useless because it adds friction for users to actually use the rollup.
  • A governance token, where a majority of votes can upgrade the rollup contract. This allows a majority of token holders to steal all user funds.

The finite execution capacity of a rollup is scarce, and this scarcity can be tokenized. Rollups can tokenize this block space scarcity through the right to collect fees as a block producer. Just as with fee-paying tokens, increasing demand for block space increases fees which increases demand for this right to collect fees. This does not add friction to end users, since they can use the rollup without needing that token to pay fees.

This token model helps solve a major challenge in rollup design: decentralizing block production.

See Also: Bankless: L2 Migration Panel Discussion (Video)

“The total supply of the USDC stablecoin on the Ethereum blockchain has surpassed that of rival Tether’s (USDT) for the first time. The current total supply of USDC on Ethereum stands at 39.92 billion, whereas USDT’s total supply on the blockchain stands at 39.82 billion, according to Etherscan.

One of the main reasons for USDC’s recent growth has been its increased usage in the decentralized finance (DeFi) market. USDT’s demand is mainly driven by centralized exchange users and institutions.

Looking at the bigger picture, USDT’s total supply across blockchain continues to remain higher than that of USDC’s. The former’s current total supply stands at over 82 billion, and the latter’s stands at around 45 billion.”

“EPNS can now be accessed through app.epns.io on the Ethereum blockchain. The protocol can be used by two broad audiences: channels and subscribers.

Channels are dapps, users, and businesses that want to send notifications to others. These notifications can be sent manually, or they can be built to respond automatically to on-chain or off-chain information. For example, a media company can push out alerts for breaking news when a story is released. Or, a DeFi project can allow users to automatically receive notifications when their loans are closing in on liquidation.

Subscribers are those who wish to receive notifications from others. Subscribers can browse the live channels on EPNS through the app, and opt-in to receive notifications from any of them. Notifications are then delivered to the subscriber’s ‘inbox’.”

“As the token-economic principles behind the multibillion-dollar “Curve Wars” expand to other protocols, a cottage industry of supporting projects is beginning to flourish. On Wednesday, governance markets platform Bribe announced the close of a $4 million seed round to help build what it refers to as a Voter Extractable Value (VEV) protocol.

Bribe joins a growing number of projects attempting to build on top of decentralized finance (DeFi) governance processes, routing value to governance token holders by enabling “bribes” – payments in exchange for voting on proposals in a certain way.

As unseemly as it may sound, it’s a flourishing tech stack spurred on by the success of Convex, a protocol effectively designed to maximize the value other projects can extract from decentralized exchange Curve Finance’s governance. The “Curve Wars” refer to an escalating battle for other protocols to accumulate and control Curve’s CRV governance tokens, which can incentivize user deposits into specific trading pools.

Bribe will initially focus on an auction platform for bribing votes in Aave governance before expanding to market-making protocol Tokemak.”

“The lawsuit, filed by a software engineer named Joseph Kent, has challenged the legality of PoolTogether’s operation, saying the scheme is essentially a lottery and prohibited under New York law.

A former technology lead for Sen. Elizabeth Warren’s 2020 presidential campaign, Mr. Kent is described in his lawsuit as someone “gravely concerned” at the prospect that cryptocurrency, which consumes voluminous amounts of electricity, could contribute to climate change, besides enabling bad actors to circumvent financial sanctions.

According to legal experts, Mr. Kent’s lawsuit could be among the first to squarely address the question of who is legally accountable when a DeFi application—known as a “protocol”—is at odds with the law or causes actionable harm to a user.

It’s an open question how courts and regulators are going to respond to these unique features of DeFi.

Mr. Cusack, PoolTogether’s founder, also has defended the protocol against the lawsuit.

It’s filed by someone who works in politics. It’s clearly written by someone who doesn’t understand how protocols operate or even what PoolTogether is.”

15 January

The mayor of Rio de Janeiro said Thursday he plans to allocate 1% of Brazil’s second-most populous city’s treasury reserves to cryptocurrencies. The Brazilian city also plans to give discounts on tax payments made with bitcoin.

We are going to launch Crypto Rio and invest 1% of the treasury in cryptocurrency.”

See Also: Strike App Won’t Support Bitcoin in Argentina

“After a rocky start to the year, bitcoin (BTC) appears to have stabilized this week, and some analysts are predicting that prices could be set to rise. Prices are likely to rebound from the current level around $42,000 though will remain within the $40,000-$60,000 band, said Gavin Smith, CEO of Panxora.

This would set bitcoin up for a move to new highs later in the year. We predict the catalyst for this move to be stubbornly high inflation numbers coupled with a continuation of negative real interest rates.

If bitcoin can break $45,500, we could see another sharp move higher as belief starts to grow that the worst of the rout is behind it.

[Negative real rates] – a function of ultra-loose monetary policies put in place by central banks around the world – encourages risk-taking since investors are effectively losing value by holding bonds and other fixed-income instruments.

Whether bitcoin is seen as a risk-on asset or as a clear inflation hedge is dependent on geography. In developed economies, bitcoin is very much seen as a risk-on asset and is being traded based on macroeconomic developments, such as inflation and central-bank stimulus programs. In developing economies like Turkey, Brazil and Argentina, however, there is a clear inflation-hedge play.

As a result of this, direction is not clear and we fully expect unpredictable, choppy moves in a broadly sideways range for the time being.

Looking at the price of bitcoin in the long term, Deane predicts continued growth, development and adoption on a global scale.

See Also: Bitcoin Holding Support Above $42K; Resistance at $45K-$47K
See Also: Crypto Options Market Starting to Have Material Impact on Spot Market: QCP Capital

The ability to trade stock on FTX.US might be only months away, according to a tweet from the exchange’s president. Bitstamp USA has also signaled it’s looking at stocks.

Robinhood is approaching the market from the opposite direction to the two exchanges, beginning with stocks and moving into crypto. It’s been adding new features to its crypto service for some time and plans to roll out the beta version of its crypto wallet feature this month, which will enable users to withdraw cryptocurrency from the platform.”

See Also: Crypto Exchange FTX Establishes $2B Fund to Invest in Crypto Startups

“The coming year is likely to see crypto-related crime decrease to an ever-smaller share of the overall industry as law enforcement takes greater advantage of the transparency provided by blockchain technology, says Kim Grauer, director of research at Chainalysis.

According to a January 6 report from Chainalysis, the growth of legitimate cryptocurrency usage is “far outpacing the growth of criminal usage.” The share of cryptocurrency transaction volume associated with illicit activity has never been lower, representing just 0.15% of transaction volume in 2021.

Law enforcement wins continue to demonstrate to bad actors that cryptocurrency’s inherent transparency makes it an undesirable means for transferring illicit funds. Cash is still king when it comes to illicit finance, and that is not likely to change.”

Philip Rosedale, founder of Linden Lab’s virtual online world Second Life, will be rejoining the project as a strategic adviser to guide its entry into the Metaverse. While he is negative on content interoperability in the Metaverse, he believes a nonfungible token (NFT)-based future is the way forward long term.

Second Life is an online social game universe that launched in 2003 when the word “metaverse” was only being used by Neal Stephenson fans. Since leaving his position as CEO of Linden Labs in 2008, Rosedale has made a name for himself in the virtual reality (VR) ecosystem. In 2013, he created the social VR company High Fidelity.”

14 January

In a ruling that is “almost identical to the El Salvador bill,” Tongan bigwig Lord Fusitu’a anticipates that his country could adopt Bitcoin by November. Tonga is a remote island nation that relies upon remittances from countries, including Australia, New Zealand and the United States.

The remittance use case was one of the primary drivers for El Salvador adopting BTC as legal tender. According to the World Bank, Tonga’s remittance as a percentage of gross domestic product is substantially higher than El Salvador, at 39% vs. 24%, respectively.

In 2021, it was widely speculated that Tonga would become one of the next countries to adopt BTC as legal tender.”

See Also: Pakistan Explores Crypto Ban as Stance Hardens: Reports
See Also: Iota selected for Phase 2A of EU blockchain initiative

“In a jampacked report on digital assets, Fidelity asset management theorizes that miner movements indicate the Bitcoin cycle has a lot more room to run. Key on-chain metrics indicate Bitcoin miners are in “massive” BTC accumulation mode.

As Bitcoin miners have the most financial incentive tho make the best guess as to the adoption and value of BTC (…) the current bitcoin cycle is far from over and these miners are making investments for the long haul.

We wouldn’t be surprised to see other sovereign nation-states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.

In essence, more regulation and better products will open up the crypto space, ‘bringing a greater portion of the hundreds of trillions in traditional assets into the digital asset ecosystem.’ Combined with miners’ hodling, it could lengthen the cycle and drive BTC to new highs.

See Also: Cryptocurrencies Pull Back as Traders Remain Cautious
See Also: DeFi Alliance Becomes ‘Alliance DAO’ After $50M Raise From 300 Web 3 Leaders

Customers will eventually be able to use their CBDC-linked Visa card or digital wallet anywhere that Visa is accepted globally. The payments firm said its crypto teams plan to work with central banks on pilot and prototype cases starting in the spring.

If successful, CBDC could expand access to financial services and make government disbursements more efficient, targeted and secure – that’s an attractive proposition for policy makers.”

See Also: BIS, Swiss National Bank, SIX Exchange Complete Wholesale CBDC Trial

“The Blockchain-based Service Network (BSN), a government-backed blockchain project in China, is working on infrastructure that would support businesses and individuals to build platforms and apps to manage NFTs.

Officially called the BSN-Distributed Digital Certificate (BSN-DDC), the project aims to support the deployment of non-crypto NFTs by offering application programming interfaces for the development of user portals and apps where fiat money would be the sole payment method. All the gas fees on the BSN-DDC network are paid with fiat money.

Public chains can’t be legally operated within China.”

13 January

The consumer price index rose 7%, but many investors anticipated a steeper increase; bitcoin and ether prices notched solid gains during the U.S. trading day.

There had been fears in the market that prices might have climbed even faster, which would have put additional pressure on the Federal Reserve to move more aggressively to tighten monetary conditions and cool down the economy.

U.S. stocks closed higher, also due to cooling concerns that the Fed might get more aggressive in tackling inflation.”

See Also: US Inflation Rose to Nearly Four-Decade High of 7% in December

“Minnesota Representative Tom Emmer has announced he will be introducing a bill intended to prevent the Federal Reserve from acting as a retail bank in the potential issuance of a digital dollar.

Emmer said the bill would prohibit the Fed from issuing a central bank digital currency, or CBDC, directly to U.S. consumers. According to the Minnesota representative, having the government entity require users to open accounts to access the benefits of a digital dollar would ‘put the Fed on an insidious path akin to China’s digital authoritarianism.’

The Fed does not, and should not, have the authority to offer retail bank accounts. Regardless, any CBDC implemented by the Fed must be open, permissionless and private. This means that any digital dollar must be accessible to all, transact on a blockchain that is transparent to all, and maintain the privacy elements of cash.”

See Also: House of Lords Committee Sees ‘No Convincing Case’ for UK CBDC

A group of U.S. banks plans to offer its own stablecoin, called USDF, in a move to tackle concerns about the reserves behind nonbank-issued equivalents. Founding members of the USDF Consortium include Synovus (the 48th largest bank in the U.S. by assets), New York Community Bank (No. 45), FirstBank (No. 88) and Sterling National Bank (No, 77).

The coin addresses the consumer protection and regulatory concerns of nonbank issued stablecoins.

USDF will operate on the Provenance blockchain and will be redeemable 1:1 for cash from any of the group’s members.”

See Also: Why Brazilians Are Turning to Stablecoins Like Tether

The move could open the door for Coinbase to offer crypto derivatives products in the U.S. At present, only a handful of exchanges allow U.S. investors to trade bitcoin and ether futures, with cash-settled products being both the most popular and the longest-available products.

FTX.US acquired LedgerX last August with a similar aim. Crypto.com also acquired retail derivatives platform Nadex late last year. FairX has relationships with major brokerages including TD Ameritrade, E*Trade, ABN AMRO, Wedbush, Virtu Financial and a handful of others.

The development of a transparent derivatives market is a critical inflection point for any asset class and we believe it will unlock further participation in the cryptoeconomy for retail and institutional investors alike.”

See Also: Checkout.com Raises $1B, Eyes Web 3 Push
See Also: Torus Rebrands to Web3Auth, Raises $13M to Simplify Crypto Logins

“Consumer credit reporting company TransUnion will enable consumers to give crypto lenders access to their personal credit data in a move that could greatly expand the possibilities of lending in the digital asset market.

Cryptocurrency investors could now receive better interest rates when borrowing money thanks to lenders being able to judge their risk profile based on credit data. Furthermore, lenders could now issue loans without requiring any collateral at all depending on the customer’s creditworthiness.

Users register with the digital passport to obtain anti-money laundering and know-your-customer verification that can be attached to their digital wallets.

Providing credit and identity data on-chain is a huge step towards improving the financial products available in the space.”

12 January

The Central Bank of Iran, or CBI, and the Ministry of Trade have reached an agreement to link the CBI’s payment platform to a trade system allowing businesses to settle payments using cryptocurrencies.

This should provide new opportunities for importers and exporters to use cryptocurrencies in their international deals.

He added that the government should not be ignoring the economic and business opportunities of the crypto industry, referring to major private cryptocurrencies like Bitcoin (BTC):

All economic actors can use these cryptocurrencies. The trader takes the ruble, the rupee, the dollar, or the euro, which he can use to obtain cryptocurrencies like Bitcoin, which is a form of credit and can pass it on to the seller or importer.”

“On Tuesday, Ethereum Push Notification Service (EPNS) announced the launch of what founder Harsh Rajat calls the “Web 3 communication primitive” with a bevy of decentralized finance (DeFi) mainstays involved. Version 1 of EPNS, which is now live, is launching with MakerDAO, Aave, Uniswap and dYdX, among others.

DeFi protocols, non-fungible token (NFT) platforms and other Web 3 infrastructure providers largely lack the capacity to send these kinds of messages, leading to an informational gulf.

For example, if you’re liquidated on a lending platform you as a wallet address will not know about it, if your governance proposal passed you won’t know about it, if you’re into NFTs you have no way to reach out to someone who bought your NFTs to let them know a new collection is out.

The project attempts to solve this problem by enabling protocols to create “channels” – distribution networks that allow dapps to manually send messages or automatically send alerts based on on-chain activity. These messages will be sent directly to Ethereum addresses. The messages are largely gasless, meaning there is no transaction fee, as the notifications are sent with the EIP-712 standard, a method for off-chain data message signing.”

See Also: Unstoppable Domains Launches NFT-Based Sign-On for Ethereum and Polygon

“Bitcoin’s Lightning Network-powered app Strike has launched its services in Argentina. The company said Tuesday that Argentines will be able to make bitcoin remittance payments, receive bitcoin tips on Twitter and use Strike’s peer-to-peer transaction services.

Argentina is one of the most exciting countries for building the Bitcoin economy, leveraging Bitcoin as both a superior asset and a superior payments network.

Argentina is the first step in a 2022 Latin American expansion that will include Brazil, Colombia and “other Latin American markets.” The company launched its payment app in El Salvador last March.”

“After months of speculation about a possible vampire attack, dominant NFT marketplace OpenSea may finally have a worthy – and more thoroughly decentralized – competitor: LooksRare. The numbers point to a searing-hot start for a day-old platform that seems to fill a clear market demand.

For months, NFT traders have clamored for OpenSea to release a token and decentralize portions of its operations. The incumbent’s policies around enforcing IP as well as delisting hacked or exploited NFTs has made it a target of critics who say it’s a rent-seeking middleman in a decentralized ecosystem. The firm was recently valued at $13.3 billion.

The question is: Will traders return to OpenSea if token incentives can’t keep them around?”

See Also: eToro rolls out smart portfolios for new metaverse investors

“The Federal Reserve’s highly anticipated report on cryptocurrencies and central bank digital currencies (CBDCs) – initially slated to come out last September – will be released “within weeks,” Fed Chairman Jerome Powell told a U.S. Senate committee on Tuesday.

The report is expected to focus on CBDCs. During his Senate confirmation hearing on Tuesday, the Fed chairman also said a CBDC wouldn’t necessarily lead to a ban on private stablecoins.

“Bitcoin rose toward $43,000 on Tuesday and is up about 3% over the past 24 hours. Several alternative cryptocurrencies (altcoins) such as MATC and FTM were up about 14% over the same period, suggesting a greater appetite for risk among investors.

For now, it appears that most buyers are remaining on the sidelines, especially ahead of the U.S. consumer price index (CPI) report, which will be released on Wednesday.

The market expects the CPI to rise 7.1% for the year through December and 0.4% over the month. If the figure released is larger than expected, we can expect further sell pressure for bitcoin. Due to the selling we have seen in recent weeks, the downside for BTC is limited in the short term, even with higher-than-expected inflation data on Wednesday.

Miners appear to be unfazed by the price dip. For example, bitcoin mining firm Bitfarms purchased 1,000 bitcoins worth $43.2 million during the first week of January.”

See Also: Key on-chain metric shows Bitcoin miners in ‘massive’ BTC accumulation mode

The move brings Citadel Securities closer to crypto, as Paradigm focuses on investing in crypto and Web 3-related firms. Pardigm was co-founded by Fred Ehrsam, a co-founder of Coinbase, and Matt Huang, who previously led crypto investments at Sequoia.

Citadel Securities handles about 27% of the shares that are traded in the U.S. stock market each day.

We look forward to partnering with the Citadel Securities team as they extend their technology and expertise to even more markets and asset classes, including crypto.”

“In two recent job postings on LinkedIn, Jack Dorsey’s Block (formerly Square) revealed the group’s plans to develop “the next generation of mining ASIC” and make a hardware wallet for the next 100 million Bitcoin (BTC) users.

The new job posting confirms that Block sets out to develop purpose-built ASICs for BTC mining. Block is the holding name for Square, CashApp, Spiral, Tidal and TBD54566975.”