May 18, 2022 - 8 min

Daily News 🚨🗞🚨

  • Ethereum’s public testnet, Ropsten, is set to go through “the merge” as one of the final preparations for the switch to proof-of-stake. This test merge of the current proof-of-work chain with the new proof-of-stake one is expected to take place on June 8.
  • Robinhood is taking on Metamask with an upcoming release of a non-custodial crypto wallet supporting NFTs and DeFi protocols with no network fees.
  • Coinbase is partnering with ENS allowing people to claim ENS ids within the Coinbase Wallet per the recent announcement at Permisionless 2022 in Palm Springs, FL.
  • Shopify merchants can now enable Pay on their online storefronts. Pay will allow for zero transaction fees, 0.5% in settlement fees (80% reduction from typical payment processors), and payment through assets such as ETH, BTC, DOT, and DOGE.
  • The in-house legal team at Terraform Labs (the creators of $LUNA and $UST) resigned shortly after the collapse of Terra’s algorithmic stablecoin wrought havoc on crypto markets.
  • EY launched a supply chain tracking service called OpsChain Supply Chain Manager on Nightfall — a Layer 2 Ethereum blockchain co-developed in partnership with Polygon. OpsChain allows organizations to create fungible or non-fungible tokens (NFTs) on Nightfall, a Polygon solution co-developed with EY using Zero-Knowledge (ZK) proofs for transaction verification that also allows companies using the blockchain to keep proprietary information private.
  • The floor price of the popular NFT collection Bored Ape Yacht Club (BAYC) fell below $200,000 on Wednesday as the NFT market continues to slide. BAYC’s floor price — currently at around $198,000 — is down by a third in ETH terms and by more than 50% in dollar terms from the beginning of May. Check out this piece on why NFTs may still have further to fall in these turbulent times.
  • According to new data from the Cambridge Centre for Alternative Finance (CCAF), China has resurged as a BTC mining world leader. China now sits as the second-largest producer of hashrate despite a ban, which prohibited crypto trading and mining, instituted last year. The United States is still the world’s leading miner of BTC.
  • LKB & Partners, one of the top law firms in South Korea, has decided to sue Terraform Labs founder and CEO Do Kwon after the collapse of the algorithmic stablecoin $UST last week.

Regulatory Updates 👮‍♀️👮‍♀️👮‍♀️

  • Bancor launches their V3 and tells CT that they will unveil the new version at Permissionless.
  • 1inch has voted to add Balancer Boosted pools to their aggregator. If 1inch successfully integrates Balancer pools within three weeks of this proposal, Balancer will reward 1inch with 20k BAL tokens. This proposal specifically selects two stablecoin boosted pools with 350m TVL that 1inch will initially add to their aggregator.
  • DEI, an algorithmic cross-chain fractional-reserve stablecoin by Deus Finance, becomes the latest algorithmic stablecoin to lose $1 peg, falling under 70¢.
  • Digital asset custody platform Fireblocks has launched a new web3 platform, with a suite of tools for developers to build DeFi, GameFi and NFT products and services.
  • NEAR developers to get seamless Web3 app deployment with Pocket Network allowing them to deploy their applications on other supported blockchains, including Ethereum, Solana, Polygon etc.
  • Terraform Labs CEO Do Kwon outlined a proposed fork for the Terra blockchain. The Terra community appears to be against the idea, favouring a token burn solution instead.
  • Parallel Finance is an institutional-grade lending protocol that specializes in decentralized finance-related services and products, recently secured Polkadot’s 16th Parachain Slot. It is currently offering some of the highest staking APYs for $DOT and $KSM.
  • GameFi seems to be in a lull. The number of active users decreased by 24.9% between March and April, continuing a downtrend seen since since October, despite an increase in the number of games. However, individual projects continue to shine as the Polygon gaming ecosystem saw 25% more new users, led by Crazy Defense Heroes and Pegaxy.
  • Index Coop is set to launch a basis-trading product known as BASIS-ETH, achieving price-neutral profit by arbing the difference between an asset price on the spot and near-term futures markets.

Terra’s Revival (Survival?) Plan - What will Do Kwon do? 👀

  • Terraform Labs CEO Do Kwon has put his Terra revival plan to the vote among holders of the ecosystem’s Luna governance token.
  • The plan is to fork the current Terra blockchain and allocate amounts of Luna to previous holders according to a set distribution. Many of the tokens would be subject to long vesting periods.
  • The proposal went live at about 7:30 a.m. ET on Wednesday. An hour later, it had 23.6 million LUNA voting in favor, with 11.3 million against. The vote needs 188 million LUNA in favor to pass.
  • Yet the community appears to be largely against the proposal, according to comments and votes on preliminary polls on the Terra governance forum. One poll shows a clear majority against the idea. At present, the poll has had 6,200 votes, with 92% voting against Kwon’s proposal.
  • Prominent Crypto voices have spoken out against Do Kwon’s proposal noting that minting/forking do not create value and that Luna’s ballooning supply should be reduced via burning.

How will Retail Sales affect Crypto Markets? 🧐

  • On Tuesday, the Commerce Department announced that Retail Sales —a measure of spending at stores, online, and in restaurants—rose a seasonally adjusted 0.9% in April compared with March. Retail sales are not adjusted for inflation.
  • Retail Sales, though slightly below the 1% economists had forecasted, came alongside a big upward revision to the March retail sales figures—the Commerce Department now says they rose 1.4% from a month earlier as opposed to 0.5%—which counted as a solid report.
  • In another sign of optimism, Retail Sales also outpaced the 0.3% increase in overall consumer prices (April - March) that the Commerce Department reported last week.
  • Home Depot reported an earnings beat of 11% and a revenue beat of 6% on Tuesday. It also raised its full-year guidance with sales expected to grow 3% and earnings to reach mid-single digits. The average amount per transaction rose 11.4%, while the number of transactions declined 8.2% in the period, as inflation continues to lift prices across its stores.
  • Walmart beat top-line expectations by 2% but missed EPS estimates by 12%. It also raised its full-year revenue guidance by 100 basis-point to 4% but now anticipates that EPS will decrease by 1% compared to the mid-single-digit growth it had previously expected. Inflation created more pressure than the company expected on margins, particularly in food and fuel, Walmart Chief Executive Doug McMillon said.

Tuesday saw a boost in broad equity markets and cryptocurrencies although as of this morning the equity markets seem unable to hold those gains. Tuesday’s lift was driven by technology shares, which theoretically should be relatively unaffected by Retail Sales. However, technology gains may have been driven by a combination of their relative underperformance this year and abatement of recession fears based on Retail Sales data. Tuesday’s relative calm also led to a 0.8% decline in the Dollar Index (DXY), which is negatively correlated with Bitcoin, but rebounded slightly by 0.2% this morning. The impact of this new data on the cryptocurrency market remains mixed. Despite strong sales numbers signaling little risk of an imminent recession and in turn lifting risk-on assets, they could also provide the cushion that the Fed needs to continue to aggressively tighten monetary policy. A continued decline in the Dollar Index could signal hope of a crypto rebound as Bitcoin becomes a more attractive store of value than the greenback. However, economists at BoFa suggest that the DXY is yet to peak despite reaching 20-year highs. To end on a positive note, the past week saw a net-inflow of $130 million into U.S. small-cap growth ETFs. Though this pales in comparison to the net $500 million out-flow over the last few months, it could signal a short-term bottom and reallocation to risk-off assets.

Web 3.0: DeFi and GameFi ♦️🎮♦️

Regulatory Updates 👮‍♀️👮‍♀️👮‍♀️

  • Vietnamese government officials backed Asia-based genomics firm Genetica and Web3 data management firm Oasis Labs’s partnership to tokenize genomics profiles with the aim to enhance genomics-based precision medicine while allowing data owners to have full control and knowledge of how their genetic data is being used.
  • Echoing comments by other European regulators, the head of Capital Markets and Transparency Supervision at the Dutch Authority for Financial Markets (AFM), Paul-Willem van Gerwen stated that the crypto derivatives market should be restricted to wholesale trade due to lack of transparency, market manipulation and “other forms of criminal activity.”
  • A report commissioned by South Korea’s federal government recommends the domestic crypto industry adopt a licensing system for exchanges and token issuers as a way of protecting investors. One recommended regulation would force coin issuers to submit a white paper to the FSC about their project that includes details about the company’s officers, how it plans to use funds raised through an ICO, and what risks are associated with the project. Updates to the white paper would have to be submitted at least seven days before proposed changes could take effect. It also suggested regulations on insider trading, price manipulation, pump-and-dump schemes, wash trading, and industry-standard transaction fees.

Deals and Investments 💸💰💸

  • Hackathon organizer DoraHacks has raised $20 million in a funding round led by FTX Ventures, the investment arm of crypto exchange FTX, and Liberty City Ventures. The capital will be used to drive the launches of the Dora Grant DAO, a decentralized grant community, and Dora Infinite Fund, a venture fund focused on NFTs.
  • N3TWORK Studios raised $46 million in a Series A funding round that was led by Griffin Gaming Partners. The fresh capital will help the studio develop and produce its first two Web 3 titles, Legendary: Heroes Unchained and Triumph, both of which will be focused on the use of cryptocurrency and Web 3.
  • Polygon has partnered with layer-3 project Orbs to launch a program that supports DeFi builders through the DeFi accelerator platform The program will provide funding opportunities, mentorship, market exposure, and a “liquidity injection” to promising projects.
  • Venture capital giant Andreessen Horowitz (a16z) has launched its inaugural gaming fund with plans to invest $600 million across game studios, gaming-related consumer apps, and infrastructure.
  • Binance, the world’s largest cryptocurrency exchange by trading volume, is actively trying to “find the ideal point for launching its local presence in India,” a Binance spokesperson told CoinDesk in an emailafter multiple sources had indicated the company’s hiring interest in the region. Despite a new tax law and the stifling of payment solutions, India’s population of 1.4 billion with more than 50% under the age of 30 could be a major on-ramp to crypto adoption globally.

From the Twitterverse ⭐️🐦⭐️