18 January

“Several key trading trends are pointing upward for the first time in months, suggesting the current rally will be more than just a temporary improvement.

“Whale” investors are not moving BTC onto exchanges as they often do during dramatic price surges, over-the-counter (OTC) desks have sharply increased their holdings and the Crypto Fear & Greed Index, a widely watched measure of investor sentiment, has entered neutral territory for the first time in 10 months.

Whales’ recent lack of movement indicates they do not view the recent rally as a selling opportunity. The increased OTC holdings often signal increased institutional demand.

Bitcoin was recently snugly perched above $21,000, which may become its new support threshold. Ether (ETH) was holding steady above $1,500 after weeks of hobbling below $1,200. Equity markets have risen more moderately, with the tech-heavy Nasdaq and S&P 500, which has a hefty technology component, climbing 5.8% and 2.8%, respectively.”

See Also: Bernstein Says Custody Services Are the Foundation for Institutional Crypto Adoption

“HashKey Capital, the investment arm of financial-services firm HashKey Group, has closed its third fund with $500 million in committed capital. The fund will invest in crypto and blockchain initiatives around the world with a focus on emerging markets. HashKey FinTech Investment Fund III was backed by institutional investors, including sovereign-wealth funds, businesses and family offices.

Launched in 2018, HashKey Capital manages over $1 billion in assets. Portfolio companies include blockchain firm Cosmos, layer 2 network Aztec, blockchain-infrastructure firm Blockdaemon and gaming and crypto venture firm Animoca Brands. HashKey operates in Hong Kong and Singapore, with a presence in the U.S. and Japan.”

“Despite the fierce headwinds the crypto industry faced over the last year, Web3 development activity has grown at an impressive rate, according to a new report.

Per the report, the number of deployed smart contracts in Q4 2022 grew 453% quarter-to-quarter, reaching a staggering 4.6 million. Additionally, the deployment of smart contracts on Ethereum’s Goerli testnet grew 187% over the last three months of 2022—and as much as 721% year-to-year—to reach an all-time high of 2.7 million and signal that more decentralized applications (dapps) may enter the market in the future.

The Web3 developer community is proving to be extremely resilient. This report shows that they’re as focused and motivated as ever to build the future of this ecosystem.”

See Also: Crypto Developers Grew in Numbers Amid Bear Market, VC Firm Electric Capital Says

In a wide-ranging discussion, a panel of blockchain industry personalities at the World Economic Forum (WEF) concluded that the economy will become increasingly tokenized in the future. Carbon credits, housing, electricity, government bonds, foreign exchange and other real-world assets will be traded on the blockchain, according to the panel’s participants.

Tokenization will be the foundation of the digital economy going forward.

The event, titled “Tokenized Economies, Coming Alive,” featured Circle CEO Jeremy Allaire, Bitkub Capital CEO Jirayut “Topp” Srupsrisopa, Finnish Minister of Transport and Communications Timo Harraka, and Yield Guild Games co-founder Beryl Li.

According to Topp, the Thai government is working on an “investment token” license, separate from the current crypto license, that will allow entrepreneurs to “tokenize all kinds of values,” including government bonds, carbon credit trading, foreign exchange, electricity units and other assets.

Harakka said that self-custody of data will be an important issue moving forward. According to him, an association in Finland was created in 2014 called “MyData.org” that intended to allow users to exercise ownership and control over their data. Allaire responded that he thought many brands desired to turn their proprietary loyalty points systems into blockchain applications, taking them from a “closed-loop system” to an “open-loop system” that could be interoperable with systems used by other brands.”

See Also: Blockchain’s Non-Crypto Applications Take Center Stage on Davos Day 2

The World Economic Forum (WEF) released a “toolkit” for decentralized autonomous organizations (DAOs) on Jan. 17. More than 100 experts contributed to the document’s attempt to provide ‘a starting point for DAOs to develop effective operational, governance and legal strategies.’ It described the toolkit as ‘a set of adaptable resources for key stakeholders to help realize the full potential of this emerging form.’

DAOs have the potential to address many of the shortcomings of the traditional firm while also realizing more equitable governance and operations.

Creating adequate policy and legal frameworks for DAOs is crucial to realizing the benefits and mitigating the risks of this novel organizational form.”

See Also: Finnish Minister Calls for EU Law to Recognize DAOs

“Co-led by Pantera and Archetype, the funding round is targeted toward building out distributed validator technology (DVT) on Ethereum.

DVT is a technology primitive that allows an Ethereum Proof-of-Stake validator to be run simultaneously on more than one node or machine. The major breakthrough is the ability to split up a single validator key, making it possible for a group of people to share validation rights of an Ethereum validator.

Validators, which earn rewards for operating the network of nodes that keeps Ethereum up and running, face challenges ranging from high capital requirements (you must “stake” 32 ETH to become a validator) and technical complexity (validators can pay penalties if they screw up or go offline).

Obol says it is already working with Lido and StakeWise to use DVT to more securely and efficiently distribute user funds across operators.”

See Also: Polygon Completes Hard Fork to Reduce Gas Fee Spikes, Disruptive Reorgs

“Now investors can use the e-CNY to buy securities with the Soochow Securities mobile app, China Securities Journal reported. Last week, the country included the digital yuan in cash circulation for the first time. It also added a function to its e-CNY payment app that allows users to make payments offline.

In October, e-CNY transactions reached a milestone of 100 billion yuan ($14 billion). The Bahamas, Jamaica and Nigeria have [also] already issued a CBDC.”

See Also: Bank of America Says CBDCs Are the Future of Money and Payments
See Also: CBDCs Are the Future of Money, IBM Exec Says

Overall, the group affirmed that a total of about $5.5 billion in liquid assets have been identified, consisting of $1.7 billion in cash, $3.5 billion of crypto assets and FTT tokens and $300 million of securities. And it confirmed that based on current estimates of the amount of digital assets associated with FTX.com and FTX US, there is a “substantial shortfall” at both exchanges.

Regarding FTX.com, the FTX debtors have identified $1.6 billion of digital assets associated with FTX.com, of which $323 million ‘was subject to unauthorized third-party transfers post-petition, $426 million of which was transferred to cold storage under the control of The Securities Commission of The Bahamas, $742 million of which is in cold storage under the control of the FTX Debtors, and $121 million of which is pending transfer to cold storage under the control of the FTX Debtors.’

With respect to FTX US, the debtors have identified roughly $181 million of digital assets, ‘$90 million of which was subject to unauthorized third-party transfers post-petition, $88 million of which is in cold storage under the control of the FTX Debtors, and $3 million of which is pending transfer to cold storage under the control of the FTX Debtors.

We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information.”

See Also: Crypto Bank Silvergate Reports Q4 Loss of $1B
See Also: Crypto Conglomerate DCG Suspends Dividends Amid Distress at Genesis Unit

Arbitrum Ecosystem Guide