Navigating Ethereum’s Staking Landscape

Wave Leadership Thoughts  

Ethereum Staking: Is Crypto’s Golden Child Becoming Too Centralized?

By Shant Ganoumian, DeFi Analyst

It’s been just over one year since Ethereum, crypto’s biggest DeFi blockchain, fully transitioned from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism. While the concept of staking promises to enhance security, scalability, and energy efficiency, concerns about centralization have cast a shadow over its landscape. At its core, Ethereum staking involves participants locking up a certain amount of Ether in a validator node, contributing to the validation of transactions and the creation of new blocks. In return, validators are rewarded with additional ETH. The decentralization ethos that underpins blockchain technology is fundamental to Ethereum’s success, yet the current infrastructure and trajectory of staking mechanisms prompts a critical examination.

It is evident that demand for staking is high, as over 33 million ETH (~27% of circulating supply) has already been staked. One of the primary concerns is the rise of a handful of prominent centralized exchanges and staking-as-a-service (SaaS) providers who collectively control a substantial portion of it. A breakdown of the largest stakers shown below reveals a concentration of influence between Lido and Coinbase, followed by Kraken and Binance as of November 29th, 2023. 

The pressing question emerges: Why does this concentration matter? The Ethereum community fears the centralization risks associated with decision-making on network upgrades, increased potential for collusion, and a higher susceptibility to targeted attacks on the network among others. Over the past seven days alone, over 200,000 ETH has been staked through Lido. This has contributed to their growing dominance, amplifying concerns about controlling a significant portion of the Ethereum network.

Balancing the benefits of staking efficiency with the imperative of preserving decentralization becomes paramount as Ethereum’s staking landscape evolves. Community collaboration, ongoing research, and innovative solutions are crucial in navigating the challenges posed by the concentration of staking power, ensuring the continued success and resilience of Ethereum’s decentralized ecosystem.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• KPMG’s Canadian unit is joining forces with blockchain data platform Chainalysis to assist companies in battling crypto fraud. As part of the collaboration, KPMG will join Chainalysis’ “Solution Provider” program. The program provides “rigorous monitoring, support, governance and risk management to crypto exchanges, financial institutions, law enforcement and government agencies.”
• China Asset Management’s Hong Kong branch has entered into a memorandum of understanding with Hashkey exchange and HamsaTech Hong Kong. The collaboration aims to jointly foster and develop Web 3.0 initiatives within the asset management sector in Hong Kong.
• Crypto hedge fund Nine Blocks Capital Management has become the first cryptocurrency hedge fund to receive a license from Dubai’s Virtual Assets Regulatory Authority (VARA).

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• Grayscale Investments recently met with the Securities and Exchange Commission as it continues to seek approval for its application to convert its Grayscale Bitcoin Trust into a spot bitcoin exchange-traded fund. The asset manager met with officials from the SEC’s division of trading and markets last week to discuss potential listing matters concerning the shares of the product.
• The SEC filed charges against the cryptocurrency exchange Kraken, accusing it of operating an unregistered securities exchange, broker, dealer, and clearing agency. Furthermore, the SEC said that Kraken commingled customer and corporate funds, including by paying operational costs from accounts that held user funds. Kraken denied the allegations and vowed to fight the lawsuit.
• Binance founder and former CEO Changpeng “CZ” Zhao was released from custody last week on a $175 million personal recognizance bond. Zhao pleaded guilty to violating the Bank Secrecy Act in court, after federal officials alleged he directed Binance to allow U.S. customers to use the platform without conducting proper know-your-customer or anti-money laundering checks.

DISCLOSURE:
THE OPINIONS EXPRESSED HEREIN ARE THOSE OF THE AUTHOR ALONE AND DO NOT REPRESENT WAVE DIGITAL ASSETS, LLC OR ANY OF ITS AFFILIATES. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THIRD-PARTY SOURCES, HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS BELIEVED TO BE ACCURATE AS OF THE DATE OF ITS PUBLICATION ONLY. CERTAIN WAVE ACCOUNTS HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED HEREIN. WAVE AND/OR THE AUTHOR MAY HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED.

NOTHING IN THIS EMAIL OR LINKED INFORMATION SHOULD BE INTERPRETED AS AN OFFER OR RECOMMENDATION TO BUY, SELL OR HOLD ANY SECURITY OR OTHER FINANCIAL PRODUCT. WAVE IS FEDERALLY REGULATED BY THE US SECURITIES & EXCHANGE COMMISSION AS AN INVESTMENT ADVISER. REGISTRATION WITH A FEDERAL OR STATE AUTHORITY DOES NOT IMPLY A CERTAIN LEVEL OF SKILL OR TRAINING. ADDITIONAL INFORMATION INCLUDING IMPORTANT DISCLOSURES ABOUT WAVE DIGITAL ASSETS LLC ALSO IS AVAILABLE ON THE SEC’S WEBSITE AT WWW.ADVISERINFO.SEC.GOV. OR, LEARN MORE INFORMATION ABOUT WAVE DIGITAL ASSETS AT WWW.WAVEGP.COM.

Crypto Market Resurgence Signals Potential Bull Run

Wave Leadership Thoughts 

With the broader market finally trending up, a resurgence of activity is sparking investor optimism, hinting at a potential bull market on the horizon. Ethereum’s daily volume has soared to $3.2 billion, reminiscent of the March meme coin frenzy. This surge reflects growing investor confidence and a dynamic shift in market trends.

A notable trend is the increasing preference for DeFi projects to raise funds through DAOs, like Alfa DAO, rather than traditional venture capital firms. This shift is driven by the desire for fairer valuations and the avoidance of the predatory practices often associated with venture firms, which tend to offload tokens quickly. Raising funds through DeFi also offers the advantage of anonymity and bypasses the need for formal entity registration, aligning with the decentralized ethos of the crypto space.

The emergence of Real World Asset (RWA) protocols is reshaping the crypto landscape, offering a fresh perspective on asset tokenization. Among these, Uranium3o8 is an upcoming project that serves as a prime example. It focuses on converting uranium into a tradable digital asset, illustrating the broader trend of integrating tangible assets into the blockchain. This development in RWAs signifies a significant shift, blending the physical with the digital, and paving the way for more diverse and tangible investment opportunities within the crypto ecosystem. Such initiatives are key to the evolving dynamics of asset management, demonstrating the potential of RWAs in modern finance.

Finally, the rise of Telegram trading bots like Banana Gun and Maestro signifies a shift in trading practices. With Uniswap’s implementation of a 0.15% trading fee on its front end, users are increasingly turning to automated trading tools for convenience and efficiency. These bots have gained significant traction, indicating a broader trend towards automated, user-friendly trading solutions in the crypto market.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Switzerland’s fifth largest cantonal bank, St. Galler Kantonalbank (SGKB), has partnered with SEBA Bank to launch bitcoin and ether custody and trading services. SGKB plans to expand its digital asset offerings based on client demand. SEBA Bank will provide digital asset brokerage and custody services for SGKB. This move marks SGKB’s entry into the digital asset space and aims to help its clients integrate cryptocurrencies into their existing investment portfolios.
• Blackrock’s plans for a spot Ether ETF have now been confirmed, per a 19b-4 form filing submitted to the U.S. SEC on Nov 9. Nasdaq filed the 19b-4 form with the securities regulator on behalf of the $9-trillion asset management firm for a proposed ETF called the “iShares Ethereum Trust.” The move signals BlackRock’s intention to expand beyond Bitcoin with its ETF aspirations. ETH increased 13% on Thursday in response.
• Multinational banking firm JPMorgan has rolled out a programmable payment feature for institutional users of its private blockchain platform JPM Coin. The capability is said to enable real-time, programmable treasury functionality and new digital business models.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• Spain has announced that it will bring forward the implementation of the European Union’s crypto law, known as MiCA, by six months. This move is expected to impact crypto firms already registered in the country, including Binance, Kraken, and Coinbase.
• The Securities and Futures Commission (SFC) in Hong Kong has announced that it will allow primary dealing of tokenized securities-related activities. This move is seen as part of Hong Kong’s efforts to become a virtual asset hub.
• After less than five hours of deliberations, 12 jurors unanimously found Sam Bankman-Fried (SBF) guilty of seven counts of fraud, money laundering, and conspiracy. SBF will be sentenced next March, and the 31 year old is facing a maximum 110 years in prison. In weighing a sentence, US District Court Judge Lewis Kaplan will consider the amount stolen, the number of victims, the substantial hardship caused, the sophistication of the crime, the fact the offense involved financial institutions, and other potential factors. Ari Redbord, a former federal prosecutor, said SBF “will not likely be sent to prison for life, but he will do significant time.”
• PayPal has recently come under the scrutiny of the SEC as the Enforcement division issued a subpoena related to its US dollar-pegged stablecoin. This development occurred approximately three months after PayPal introduced its own US dollar-denominated PYUSD stablecoin in early August. PYUSD is issued by Paxos Trust and is backed by a reserve of US dollar deposits, short-term Treasurys, and similar cash equivalents.
• The United Kingdom government published an updated version of its plans to regulate the fiat-backed stablecoins, revealing the approach of the Financial Conduct Authority (FCA) and Bank of England.
• Crypto.com has been granted a license to operate a virtual asset service provider in Dubai. The license was given to its Dubai entity, CRO DAX Middle East FZE, which received preparatory approval from Dubai’s Virtual Assets Regulatory Authority (VARA) in March. The company is now in the third stage of the licensing process and will need to meet localization requirements and conditions before commencing operations. Once approved, Crypto.com will be able to provide exchange services, broker-dealer services, management and investment services, and lending and borrowing services.
• A group of bipartisan U.S. lawmakers, led by Chairman of the House Financial Services Committee Patrick McHenry and Congressman Ritchie Torres, is urging the Treasury to revise its proposed digital-assets taxation regime. The lawmakers are supporting crypto representatives and lawyers who have criticized the proposed taxation scheme as “dangerous and improper overreach.” They argue that the tax reporting requirement is “unworkable” and that the proposed regulation’s definition of a digital asset “Broker” is overly broad. The lawmakers believe that the current proposal could threaten the existence of a large portion of the digital asset ecosystem in the United States.

DISCLOSURE:
THE OPINIONS EXPRESSED HEREIN ARE THOSE OF THE AUTHOR ALONE AND DO NOT REPRESENT WAVE DIGITAL ASSETS, LLC OR ANY OF ITS AFFILIATES. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THIRD-PARTY SOURCES, HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS BELIEVED TO BE ACCURATE AS OF THE DATE OF ITS PUBLICATION ONLY. CERTAIN WAVE ACCOUNTS HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED HEREIN. WAVE AND/OR THE AUTHOR MAY HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED.

NOTHING IN THIS EMAIL OR LINKED INFORMATION SHOULD BE INTERPRETED AS AN OFFER OR RECOMMENDATION TO BUY, SELL OR HOLD ANY SECURITY OR OTHER FINANCIAL PRODUCT. WAVE IS FEDERALLY REGULATED BY THE US SECURITIES & EXCHANGE COMMISSION AS AN INVESTMENT ADVISER. REGISTRATION WITH A FEDERAL OR STATE AUTHORITY DOES NOT IMPLY A CERTAIN LEVEL OF SKILL OR TRAINING. ADDITIONAL INFORMATION INCLUDING IMPORTANT DISCLOSURES ABOUT WAVE DIGITAL ASSETS LLC ALSO IS AVAILABLE ON THE SEC’S WEBSITE AT https://adviserinfo.sec.gov/ OR, LEARN MORE INFORMATION ABOUT WAVE DIGITAL ASSETS AT https://wavegp.com/.

How NFTs Are Changing the Way We Interact with the Digital World

Pudgy Penguins: Experimenting with NFT IP

Pudgy Penguins stands out as a unique project in the non-fungible token (NFT) landscape. The project initially comprised 8,888 collectible NFTS, but has undergone a notable transformation since being acquired by CEO Luca Netz in April 2022 for 750 ETH. Under the leadership of Netz, Pudgy Penguins aimed to redefine the boundaries of how an NFT operates in both the physical and digital worlds. His ambitious vision for Pudgy Penguins sees the project not only as a collection of digital collectibles but as having the potential to achieve global recognition on an unprecedented scale.

Pudgy Penguins has expanded its scope under Netz’s leadership to operate as an “IP and brand development company” called Igloo Company. The project has ventured beyond digital assets into the physical realm with the introduction of Pudgy Toys. These toys come equipped with a QR code that allows users to access a Web3 experience, making it more accessible to those unfamiliar with the intricacies of MetaMask and OpenSea. The Igloo Company is thereby reducing friction for users to easily access, own, and understand NFTs and creating a gateway for new users to onboard to Web3.

Pudgy Penguins is also implementing intellectual property (IP) in other innovative ways. They have explored IP licensing to allow the NFT holders to actively participate in the growth of the ecosystem through revenue-sharing. This model aims to facilitate a mutually beneficial arrangement for both creators and collectors, thereby creating a sustainable system and strengthening connections between creators, collectors, and the broader Web3 landscape. As NFT projects continue adapting to changing consumer tastes, creative projects like Pudgy Penguins are closing the gap between web3 users and non-web3 users.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Mastercard has partnered with crypto payment platform MoonPay to explore Web3-based experiential marketing. The collaboration aims to find new ways to connect with Mastercard’s consumers using Web3 tools. MoonPay will provide Mastercard with its entire Web3 portfolio, including services such as auth to minting to ETHPass.
• Deutsche Bank and Standard Chartered are testing a system that will allow blockchain-based transactions, stablecoins, and central bank digital currencies to talk to one another, taking an approach similar to the SWIFT messaging layer in legacy banking infrastructure. The banks are running a series of test cases, including transferring and swapping USDC stablecoins, on the Universal Digital Payments Network (UDPN), a permissioned blockchain system composed of validator nodes run by an alliance of banks, financial institutions and consultancies.
• The World Bank issued a 100 million euros ($105 million) digital bond on Euroclear’s new blockchain-based securities issuance platform. This marks the first use of Euroclear’s Digital Securities Issuance (D-SI) service, which enables the issuance, distribution, and settlement of tokenized securities on the blockchain. The two-year bond, listed on the Luxembourg Stock Exchange, was issued by the International Bank for Reconstruction and Development (IBRD), the World Bank’s lending arm. It aims to support the World Bank’s sustainable development activities.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• The U.S. Federal Deposit Insurance Corp. (FDIC) has come under scrutiny from its inspector general due to its failure in offering banks proper instructions on how to manage cryptocurrencies. According to the inspector general’s report, the FDIC’s absence of well-defined protocols has created a state of ambiguity for banks when it comes to deciding the correct steps to follow in dealing with cryptocurrencies.
• Regulators in Singapore, Japan, the UK, and Switzerland have announced plans to conduct asset tokenization pilots for fixed income, foreign exchange, and asset management products. The Monetary Authority of Singapore (MAS) has established Project Guardian, a group that includes Japan’s Financial Services Agency (FSA), the UK’s Financial Conduct Authority (FCA), and Switzerland’s Financial Market Supervisory Authority (FINMA), to promote cross-border collaboration in asset tokenization.

DISCLOSURE:
THE OPINIONS EXPRESSED HEREIN ARE THOSE OF THE AUTHOR ALONE AND DO NOT REPRESENT WAVE DIGITAL ASSETS, LLC OR ANY OF ITS AFFILIATES. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THIRD-PARTY SOURCES, HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS BELIEVED TO BE ACCURATE AS OF THE DATE OF ITS PUBLICATION ONLY. CERTAIN WAVE ACCOUNTS HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED HEREIN. WAVE AND/OR THE AUTHOR MAY HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED.

NOTHING IN THIS EMAIL OR LINKED INFORMATION SHOULD BE INTERPRETED AS AN OFFER OR RECOMMENDATION TO BUY, SELL OR HOLD ANY SECURITY OR OTHER FINANCIAL PRODUCT. WAVE IS FEDERALLY REGULATED BY THE US SECURITIES & EXCHANGE COMMISSION AS AN INVESTMENT ADVISER. REGISTRATION WITH A FEDERAL OR STATE AUTHORITY DOES NOT IMPLY A CERTAIN LEVEL OF SKILL OR TRAINING. ADDITIONAL INFORMATION INCLUDING IMPORTANT DISCLOSURES ABOUT WAVE DIGITAL ASSETS LLC ALSO IS AVAILABLE ON THE SEC’S WEBSITE AT https://adviserinfo.sec.gov/ OR, LEARN MORE INFORMATION ABOUT WAVE DIGITAL ASSETS AT https://wavegp.com/.

SEC’s Stance on Bitcoin ETF and Market Implications

Wave Leadership Thoughts, by Nauman Sheikh, Head of Protocol Treasury Management 

Late on Friday, the SEC decided against appealing a court ruling in favor of Grayscale Investments concerning the SEC’s review of the conversion of the Bitcoin Trust into a spot Bitcoin exchange-traded fund (ETF). This decision came after a 45-day appeal period. Following this, the SEC will likely be instructed to revisit Grayscale’s ETF application.

In our experience, market participants estimate a 90% chance of this happening in Q1 2024. However, it’s crucial to note that the SEC might still unearth other grounds for refusal. Monday morning’s inaccurate reports by Cointelegraph regarding a Blackrock BTC spot ETF approval may not sit well with the SEC, illustrating yet another example of market susceptibility to misinformation. Bitcoin saw a brief 10% rally on the tweet, ignited by a $75 million short liquidation cascade, but retreated quickly as the false news was corrected. Nevertheless, spot prices remain at levels higher than before the tweet, with implied volatilities experiencing a 6-7% surge post-tweet, a change that has yet to be undone.

The optimism in the market is also reflected in the shrinking Grayscale discounts. GBTC now trades at a lesser -15% discount compared to a stark -50% discount at the beginning of 2023. The lucrative phase of this long GBTC/Short Bitcoin arbitrage seems to have passed, and some traders are likely to start booking profits, which could maintain a bid on BTC spot. 

The discussion is also veering towards whether, upon the announcement of an ETF issuer, the SEC would show favoritism, for instance, preferring Blackrock over others. We believe such an occurrence appears unlikely. ETF issuers inherently have a first-mover advantage, and any biased approval would set a hazardous precedent, potentially subjecting the SEC to scrutiny. We believe the more likely scenario is the SEC approving all the spot ETF registrations on the same day, fostering a competitive environment similar to the ETH futures ETFs scenario where all 9 were approved simultaneously.

The ETF Approval Pipeline is brimming with notable applications from 21Shares & ARK, BlackRock, Bitwise, VanEck, Wisdomtree, Invesco & Galaxy, Fidelity, and Valkyrie, all awaiting their fate in this evolving landscape.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• UBS Asset Management has launched its first live pilot of a tokenized Variable Capital Company (VCC) fund in Singapore, marking a key milestone in bringing real-world assets on-chain. The fund is part of Project Guardian, a collaborative industry initiative led by the Monetary Authority of Singapore to explore tokenizing various real-world assets. Utilizing UBS’s in-house tokenization service UBS Tokenize, the firm launched a controlled pilot of a tokenized money market fund on the Ethereum blockchain to enable activities like onchain fund subscriptions and redemptions. Elsewhere, the tokenization of funds is a growing trend among traditional funds and asset managers, with large institutions such as Franklin Templeton, KKR, and Hamilton Lane launching tokenized funds already.
• El Salvador announced the launch of Lava Pool, the country’s first Bitcoin mining pool powered entirely by renewable geothermal energy.
• This week Starbucks will release a series of Pumpkin Spice Latte digital stamps via Starbucks Odyssey, the company’s Web3 rewards and loyalty platform. The NFTs will be sold in four varieties to represent the qualities of the physical drinks: Spiced, Whipped, Iced, and Steamed.
• Russian corporations are starting to make use of the digital ruble, the country’s central bank digital currency (CBDC). Per a report from SPB IT RU, the state-run Sirius Innovation Science and Technology Center has opened a corporate digital ruble wallet.
• On Wednesday, October 4, the Bank of Korea, the Financial Services Commission, and the Financial Supervisory Service announced that they would jointly pursue an experiment (‘CBDC usability test’) to build future currency infrastructure.
• JPMorgan has carried out its first live blockchain-based collateral settlement transaction involving BlackRock and Barclays, the U.S. banking giant said on Wednesday October 11. JPMorgan’s Ethereum-based Onyx blockchain and the bank’s Tokenized Collateral Network (TCN) was used by BlackRock to tokenize shares in one of its money market funds. The tokens were then transferred to Barclays Plc for collateral in an OTC (over-the-counter) derivatives trade.
• Switzerland-based crypto infrastructure provider, Taurus, is expanding its presence in Europe after partnering with Deutsche Bank. Taurus, which offers infrastructure for issuing, custodying, and trading crypto, tokenized assets, and NFTs, is opening offices in London and Paris.
• Mastercard, in collaboration with the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre, has announced the latest developments in their central bank digital currency (CBDC) pilot project. The pilot involved a live transaction where an NFT was purchased on the Ethereum blockchain using a “wrapped” version of the CBDC.
• Ferrari is set to accept cryptocurrency payments in the United States, with plans to expand the scheme to Europe in response to customer demand. The company will use crypto payments provider BitPay to process transactions in Bitcoin, Ethereum, and USD Coin.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• Hong Kong’s police force and the Securities and Futures Commission (SFC) have formed a joint task force to monitor suspicious activity on cryptocurrency exchanges. The task force was established following a high-level meeting between the two authorities on September 28. Its main objective is to enhance collaboration in monitoring suspicious and illegal activities on virtual asset trading platforms (VATPs). The task force includes members from the police force’s Commercial Crime, Cyber Security Financial Intelligence, and Investigations divisions, as well as representatives from the SFC’s Enforcement and Intermediaries divisions. 
• The Hong Kong Stock Exchange (HKEX) has launched a blockchain-based settlement platform called Synapse, aimed at improving post-trade processes for global investors. Synapse integrates smart contracts using Digital Asset Modelling Language (DAML), a programming language launched by Digital Asset in 2016. 
• The Canadian Securities Regulators (CSA), have provided clarity on their approach to stablecoins, referring to them as value-referred cryptoassets. The CSA announced that they may allow trading of stablecoins tied to a single fiat currency, known as fiat-backed cryptoassets, under certain conditions. These conditions include stablecoin issuers maintaining an adequate reserve of assets with a qualified custodian and disclosing information about their governance, operations, and asset reserves to the public.
• Lawmakers in Taiwan are working towards creating a special law for offshore exchanges by the end of November 2023, according to a report. Yung-Chang Chiang, an official in the Legislative Yuan of Taiwan, stated that the first draft of the law will be available for reading by parliament by the end of November or sooner. Chiang believes that such a law is necessary to regulate crypto-related businesses and address concerns over activity in offshore markets
• Judge Analisa Torres rejected the SEC’s wish for an interlocutory appeal on Wednesday. The denial was made on the grounds that the Judge’s previous order — which gave Ripple a partial win — did not entail an order that “involved a controlling question of law,” which is necessary for the certification of an interlocutory appeal.
• Coinbase is currently embroiled in a critical legal battle with federal regulators, facing allegations of running an unregistered securities exchange that could threaten its very existence. Recent legal submissions may bolster the SEC’s position by asserting its authority to regulate the cryptocurrency domain.
• US Senators, including Elizabeth Warren and Angus King, are urging the IRS to accelerate the implementation of tax reporting regulations for crypto brokers. They argue that the projected two-year timeline for implementation would result in potential lost revenues of $50 billion annually and would not align with the stipulations of the Infrastructure Investment and Jobs Act.
• A second Chinese court has ruled that crypto lending is an activity outside the protection of the country’s legal system. The issue at hand arose from an unpaid stablecoin loan between two individuals. However, the Nanchang People’s Court ruled that the plaintiff was required to prove that Tether is a legally issued fiat currency to bring judicial relief, which the plaintiff was unable to do.

DISCLOSURE:
THE OPINIONS EXPRESSED HEREIN ARE THOSE OF THE AUTHOR ALONE AND DO NOT REPRESENT WAVE DIGITAL ASSETS, LLC OR ANY OF ITS AFFILIATES. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THIRD-PARTY SOURCES, HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS BELIEVED TO BE ACCURATE AS OF THE DATE OF ITS PUBLICATION ONLY. CERTAIN WAVE ACCOUNTS HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED HEREIN. WAVE AND/OR THE AUTHOR MAY HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED.

NOTHING IN THIS EMAIL OR LINKED INFORMATION SHOULD BE INTERPRETED AS AN OFFER OR RECOMMENDATION TO BUY, SELL OR HOLD ANY SECURITY OR OTHER FINANCIAL PRODUCT. WAVE IS FEDERALLY REGULATED BY THE US SECURITIES & EXCHANGE COMMISSION AS AN INVESTMENT ADVISER. REGISTRATION WITH A FEDERAL OR STATE AUTHORITY DOES NOT IMPLY A CERTAIN LEVEL OF SKILL OR TRAINING. ADDITIONAL INFORMATION INCLUDING IMPORTANT DISCLOSURES ABOUT WAVE DIGITAL ASSETS LLC ALSO IS AVAILABLE ON THE SEC’S WEBSITE AT https://adviserinfo.sec.gov/ OR, LEARN MORE INFORMATION ABOUT WAVE DIGITAL ASSETS AT https://wavegp.com/. 

Real World Asset Protocols Breathe Life Back into DeFi

Wave Leadership Thoughts 

Decentralized finance (DeFi) yields sank into oblivion during the latter half of 2022 as the crypto bull market came off the rails. This struck us as odd – crypto investor confidence dropped to all-time lows as risks multiplied, which should have driven up risk premiums, all while risk-free rates were increasing to above 4% by year-end. Yet billions of dollars sat on Aave and Compound for much of 2022, earning sub-1.5% yields.

This irrational scenario underlined just how far removed DeFi may be from traditional finance (TradFi), with investors unable to move easily between the two. Instead, DeFi experienced a scenario familiar to anyone who remembers the QE-driven economy of the 2010s: a large pool of capital sloshing around a limited investment ecosystem. This depressed yields while allowing failed dApps to become zombies, stumbling from crisis to crisis without innovation or improvement, fueled by slugs of stagnant capital.

Luckily in DeFi new business ideas are often only a few lines of code and a good lawyer away. Real World Asset (RWA) protocols began arriving in late 2022, with US Treasuries (UST) at the vanguard. A myriad of different tokenized UST structures have developed amid fierce competition. These include projects from major players like Franklin Templeton and WisdomTree, and more defi-native protocols like Ondo Finance, OpenEden, and Backed. Over $660 million in USTs have been brought on-chain as a result – although if you count Tron’s shadowy stUSDT it may be as high as $2.4 billion.

We believe this has caused DeFi yields to slowly grind higher, to the relief of beleaguered yield farmers. It’s also having a cleansing effect, with non-competitive protocols closing down as capital finally moves into more competitive investments. The increasing exposure to USTs may help demonstrate the importance of the crypto industry to TradFi as well. The two largest stablecoin companies, Tether and Circle, have shifted most of their $108 billion of collateral to USTs. This means that potentially $110 billion of short-term USTs are held by crypto companies and protocols, putting crypto among the 20 largest foreign UST holders in the world, and generating at least $220 billion of buy pressure per year. This comes at a time when the Treasury is seeing decreased demand amidst record-high federal deficits. Participants worry that popular attacks against crypto may stifle future innovation – but perhaps it’s killing a present-day golden goose too. 

Market Update 

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Binance Japan is partnering with Mitsubishi UFJ Trust Bank (MUTB) to create new stablecoins pegged to major currencies in Japan. The partnership will launch stablecoins pegged to fiat currencies, such as the Japanese Yen, and other foreign currencies, such as the U.S. Dollar.
• Microsoft is considering ways to integrate crypto wallet support into its Xbox gaming suite, according to documents leaked on September 19. The leaked documents are from a deposition that is part of the FTC’s lawsuit against Microsoft’s proposed $69 billion acquisition of Activision Blizzard⁠—the gaming behemoth behind World of Warcraft, Hearthstone, Overwatch, Call of Duty, and Diablo III, among other triple-A titles.
• VanEck is launching its Ethereum Strategy ETF, which began trading on October 2nd. The ETF, listed under the ticker EFUT, will be traded on the Chicago Board Options Exchange (CBOE). The fund will invest in ether futures contracts, providing exposure to cash-settled ETH futures contracts traded on regulated commodities exchanges. It is important to note that the ETF does not have direct exposure to ETH. VanEck has also announced that it plans to donate 10% of all profits from the ETF to Ethereum core developers over the next decade.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• The U.S. Securities and Exchange Commission (SEC) has approved asset manager Valkyrie to trade Ethereum futures, while delaying its decision on a spot Bitcoin ETF. Valkyrie will add Ethereum futures to its existing Bitcoin ETF, with plans to allocate 10% of its fund to Ether initially and increase it to 50% on Monday October 2nd. 
• Cryptocurrency exchange Gemini has announced that it will cease offering its services to customers in the Netherlands starting from November 17. The decision is attributed to regulatory requirements imposed by the De Nederlandsche Bank (DNB). Gemini has urged its customers to withdraw their crypto and fiat balances before the specified date.
• A new bill introduced by U.S. Democrat Representative Don Beyer aims to require cryptocurrency service providers to report all off-chain transactions to a government repository registered with the Commodity Futures Trading Commission (CFTC). The bill, called the “Off-Chain Digital Commodity Transaction Reporting Act,” aims to protect cryptocurrency investors from disputes, manipulation, or fraud that may arise from transactions occurring off-chain.
• The U.S. Securities and Exchange Commission (SEC) has once again delayed its decision on four Bitcoin exchange-traded fund (ETF) filings. The SEC announced separate extensions for BlackRock, Bitwise, Invesco Galaxy Digital, and Valkyrie. This is the second round of delays for these ETF applications in a month.
• Crypto exchange Coinbase has been given the green light to offer perpetual futures to non-US retail investors via Coinbase International Exchange. The announcement followed an earlier approval that enabled perpetual futures trading for non-US institutions.
• Coinbase has obtained a full operating license from the Monetary Authority of Singapore (MAS). The Major Payment Institution (MPI) license will enable Coinbase to offer enhanced services to both individuals and institutions in Singapore. This follows the In-Principle Approval (IPA) Coinbase received last year, demonstrating its commitment to the Singapore market.

Disclaimer: The views and opinions expressed herein are those of the author alone and do not represent Wave Digital Assets LLC or any of its affiliates (collectively, “Wave”). The author and/or Wave may hold investment positions in some of the assets discussed. Nothing in this material or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. This material is not intended to provide accounting, legal or tax advice. Certain information contained herein has been obtained from third-party sources, has not been independently verified and should not be viewed as being endorsed by Wave. Such information is believed to be accurate as of the date of its publication. No representation or warranty is made, express or implied, with respect to the accuracy or completeness, and readers should not place undue reliance on the information contained or linked to herein. Certain statements in this material provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Past performance is not indicative of future results.

Wave is federally regulated by the US Securities & Exchange Commission as an investment adviser. Registration with a federal or state authority does not imply a certain level of skill or training. Additional information including important disclosures about Wave Digital Assets LLC also is available on the SEC’s website at www.adviserinfo.sec.gov. Or, learn more information about Wave at www.wavegp.com.

The State of the Crypto Market and What Investors Need to Know

Market Overview: 

Embrace the Doldrums

Just as the great sailors of yore were occasionally caught on the high seas without a breath of wind to propel their mighty ships, so crypto sometimes finds itself stuck in the doldrums. We playfull refer to this as crab season, as prices resolutely march sideways, coiling under a certain threshold – currently $30k for BTC and $1,900 for ETH – before entering a new period of action. Bitcoin 30-day volatility reached a historic low at 17% this week, and the overall crypto market cap has been almost perfectly flat for the last two months. 

This is nothing new to those who have survived past cycles. The tumult of 2022 provoked panic and despair as prices careened downward, echoing the stupendous crashes in 2018. Who can forget the acute pain of a market meltdown, the awe of witnessing financial destruction on a massive scale, or the sudden relief when prices finally bottom out? But few remember the other despair, that of boredom and minimization. In 2019, when no one in tradfi wanted to hear the word crypto (indeed there was a short-lived movement to stop using the word), investors laughed you out of the room, and service providers wouldn’t take you seriously. This can often be harder to deal with, as the doldrums drag on for month after month, with no end in sight. This is where we are now in the cycle, the infamous “darkest before dawn” moment. But it’s not really that dark anymore. Perhaps a little perspective can be helpful:

The largest asset manager in the world, with $9 trillion in assets, is currently awaiting approval for a bitcoin ETF. 130 countries, representing 98% of global GDP, are currently exploring central bank digital currencies, including 19 of the G20. Real world assets, led by tokenized US Treasuries, are flooding onto the blockchain and opening the door to the next stage of DeFi expansion. Ethereum continues to reach new records in terms of active validators and ETH staked. The US Congress has a caucus specifically dedicated to promoting blockchain and crypto. Paypal launched its own stablecoin. Coinbase received CFTC approval to offer crypto futures trading. Bitgo, a crypto custodian, just raised $100 million at a $1.75 billion valuation despite the bear market. The first spot Bitcoin ETF went live in Europe.

This is hardly the picture of a dying ecosystem. Adoption comes in cycles, and the doldrums give us the wonderful (and soon to be missed) ability to focus and execute. Don’t lose sight of the bigger picture. And enjoy the lightly-attended conferences – in two years you’ll hardly be able to navigate them.

NFT Market News:

The Met X Roblox

The Metropolitan Museum of Art, known globally as The Met, has tapped into the digital frontier, forming a unique partnership with the widely-played online gaming platform, Roblox. This collaboration introduces “Replica”, an augmented reality quest that integrates The Met’s illustrious collection into the virtual realm. Participants can traverse the museum via the app, scanning select artworks, and subsequently acquiring digital renditions of these historic pieces—such as the renowned Van Gogh’s “Self-Portrait”—to adorn their Roblox avatars.

This venture underscores a broader trend of institutions harnessing digital platforms to enhance accessibility and engagement. By bridging the rich tapestry of traditional art with the dynamism of the digital universe, The Met is seeking to democratize art appreciation for a younger, tech-savvy audience and redefining how classic art can be interacted with in the modern age.

https://decrypt.co/152282/the-met-metropolitan-museum-roblox-replica-quest 

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Aptos is leveraging Microsoft’s infrastructure to deploy new offerings that combine AI and blockchain technology, including a new chatbot called Aptos Assistant, which will answer user questions about the Aptos ecosystem and provide resources to developers who are building smart contracts and decentralized apps. The chatbot is powered by Microsoft’s Azure OpenAI Service.
• Visa is testing an innovative solution enabling on-chain gas fees to be paid using a Visa card.
• British digital bank Starling is planning its first expansion outside of Europe, targeting a move into Asia-Pacific. The digital lender, which is backed by Goldman Sachs, is in talks with an Asian bank about taking its Engine banking-as-a-service platform into a country in Asia.
• MetaMask is now offering an optimized Apple Pay option thanks to fiat-to-crypto onramp and fintech firm Banxa.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• The SEC has moved forward in seeking interlocutory  appeal of the recent judgment partially favoring Ripple in its protracted lawsuit. This legal dispute traces back to a July 13 order when the court determined in partial favor of the defendants, saying that its sales of XRP tokens on exchanges and through algorithmic procedures were not investment contracts. The SEC states: “With respect to the Programmatic and other sales, the SEC respectfully avers that Ripple conflicts with and adds baseless requirements to Howey and its progeny. Respectfully, those portions of Ripple were wrongly decided, and this Court should not follow them.” Drawing parallels, the SEC refers to a more recent, contrasting judgment in the SEC vs. Terraform Labs case. The stakes for the appeal are high, as a clearer understanding of the applicability of securities laws in the crypto arena could redefine the industry, affecting a vast expanse of transactions and investments.
• France has amended its registration requirements for crypto firms to better align with the European Union’s new regulations for the sector. The country’s financial regulator AMF has “enhanced” registration requirements for digital asset service providers set to take effect on Jan. 1, 2024.
• Singapore is among the world’s first to agree to stablecoin crypto regulation.

DISCLOSURE:
THE OPINIONS EXPRESSED HEREIN ARE THOSE OF THE AUTHOR ALONE AND DO NOT REPRESENT WAVE DIGITAL ASSETS, LLC OR ANY OF ITS AFFILIATES. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THIRD-PARTY SOURCES, HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS BELIEVED TO BE ACCURATE AS OF THE DATE OF ITS PUBLICATION ONLY. CERTAIN WAVE ACCOUNTS HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED HEREIN. WAVE AND/OR THE AUTHOR MAY HOLD INVESTMENT POSITIONS IN SOME OF THE ASSETS DISCUSSED.

NOTHING IN THIS EMAIL OR LINKED INFORMATION SHOULD BE INTERPRETED AS AN OFFER OR RECOMMENDATION TO BUY, SELL OR HOLD ANY SECURITY OR OTHER FINANCIAL PRODUCT. WAVE IS FEDERALLY REGULATED BY THE US SECURITIES & EXCHANGE COMMISSION AS AN INVESTMENT ADVISER. REGISTRATION WITH A FEDERAL OR STATE AUTHORITY DOES NOT IMPLY A CERTAIN LEVEL OF SKILL OR TRAINING. ADDITIONAL INFORMATION INCLUDING IMPORTANT DISCLOSURES ABOUT WAVE DIGITAL ASSETS LLC ALSO IS AVAILABLE ON THE SEC’S WEBSITE AT WWW.ADVISERINFO.SEC.GOV. OR, LEARN MORE INFORMATION ABOUT WAVE DIGITAL ASSETS AT WWW.WAVEGP.COM.

BTC and ETH Consolidate, Altcoins Under Pressure

Market Overview: 

As we look forward to the next couple of weeks, several key factors stand out that could potentially drive short-term market weakness.

1) This week’s inflation numbers, including CPI and PPI released on Thursday and Friday respectively, will be crucial market drivers. Following mixed employment figures last week, these numbers will provide further market direction guidance.

2) The inflation data gains significance in light of the recent steepening of the yield curve, driven by factors such as the Fitch downgrade, the Treasury Department’s aggressive $100B+ debt issuance plan, and a surge in oil/gas demand and prices. Some Fed members are advocating for further rate hikes in response to these inflationary pressures.

3) The yield resurgence could potentially impact equity prices, increase equity/rate volatility, and strengthen the dollar. With the S&P trading at 20x forward earnings (a 90th percentile level), the market is primed for a correction. If an aggressive sell-off occurs, crypto, which has had near-zero correlation with equities in recent months, may recouple with the equity markets.

4) BTC and ETH have dipped below support levels of 29k and 1850 respectively, but continue to consolidate within a tight range. Short-term implied volatility has decreased to the low 30s, with realized volatility even lower. BTC volatility, slightly higher than ETH’s, factors in the potential approval of a spot ETF.

5) The initial 20% BTC rally, sparked by Blackrock’s spot ETF announcement, has faded. The Ark ETF application review is due on August 13th, followed by Blackrock’s on September 3rd. The market seems to anticipate a likely extension of the review period, pushing the decision towards year-end, as reflected in the spot price consolidation and grayscale trust weakness (GBTC and ETHE).

6) Altcoins are facing pressure due to various FUD factors, including the resolved Curve exploit, upcoming token unlocks worth $180mm+, and profit-taking on catalyst-driven performers like XRP, LTC, etc

NFT Market News:

Beeple purchases CryptoPunk

Acclaimed digital artist, Beeple, recently ventured into profile-picture NFTs, procuring the distinct CryptoPunk #4593 for 113.7 ETH or $208,000. This CryptoPunk stands out for its unique clown like appearance, notably with the clown nose and clown eyes green traits. Before this acquisition, Beeple crowdsourced advice on Twitter for the ideal punk choice, and his audience eagerly responded. Following the purchase, Beeple unveiled a digital artwork titled “A Punk Is Born,” showcasing himself styled as his new NFT. This acquisition highlights Beeple’s appreciation for the transformative impact of NFTs, especially CryptoPunks, in redefining a move toward digital identity and ownership.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Deloitte has partnered with blockchain security firm Chainalysis to enhance digital asset tracking and investigations. In a recent blog post, Chainalysis said the collaboration will allow them to assist their mutual clients in addressing compliance challenges in the digital asset ecosystem. The alliance will allow Deloitte’s clients to leverage Chainalysis’ proprietary blockchain dataset, industry-leading analytics software, and training program, the announcement said. 
• The Digital Dollar Project (DDP) announced the successful completion of a cross-border central bank digital currency (CBDC) trial in the Philippines, which it developed with Western Union. The pilot study assessed the potential advantages of using CBDCs for international remittances, leveraging a distributed ledger technology (DLT) platform to simulate the transfer of digital dollars and Philippine pesos. It highlighted key benefits such as reduced risks, lower costs, and enhanced transaction visibility.
• Hyundai and KIA announced a new blockchain and AI-powered Supplier CO2 Emission Monitoring System (SCEMS). The public Hedera DLT will be used to record the carbon emissions data from suppliers and artificial intelligence (AI) will predict future emissions.
• PayPal (PYPL) announced the global payments giant is issuing its own U.S. dollar-pegged stablecoin. The Ethereum-based token will soon be available to PayPal U.s. users and is the first time a major financial company is issuing its own stablecoin.

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• A US SEC Commission lawsuit against Terraform Labs is set to go ahead after a U.S. judge overseeing the case denied the firm’s motion to dismiss on July 31. In handing down the order, the judge also in part rejected a July 13 decision from U.S. District Judge Analisa Torres, who ruled that Ripple did not violate securities laws by selling its token on public exchanges.
• Following multiple setbacks with European regulators, Binance has become the first digital asset exchange to receive an Operational Minimum Viable Product (MVP) license from Dubai’s Virtual Assets Regulatory Authority (VARA). The news comes as the exchange faces regulatory challenges in several European territories, including Germany, the Netherlands, and the U.K. The Operational MVP license, issued to the Dubai subsidiary, Binance FZE, allows the company to offer regulated virtual asset exchange services under VARA’s investor protection and market assurance standards.

Disclosure: The opinions expressed herein are those of the author alone and do not represent Wave Digital Assets, LLC or any of its affiliates. Certain information contained herein has been obtained from third-party sources, has not been independently verified and is believed to be accurate as of the date of its publication only. Certain Wave accounts hold investment positions in some of the assets discussed herein. Wave and/or the author may hold investment positions in some of the assets discussed.

Nothing in this Newsletter or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. Wave is a federally regulated by the US Securities & Exchange Commission as an investment adviser. Registration with a federal or state authority does not imply a certain level of skill or training. Additional information including important disclosures about Wave Digital Assets LLC also is available on the SEC’s Website at WWW.ADVISERINFO.SEC.GOV. Or, learn more information about Wave Digital Assets at WWW.WAVEGP.COM.

Volatility Lows and DeFi Setback

Market Overview: 

Crypto round up:

Current market conditions continue to exhibit subdued activity, with Bitcoin (BTC) and Ethereum (ETH) experiencing 10-day realized volatility at the 23rd and 18th period moving averages, respectively, reflecting their lowest levels since the beginning of the year. Amidst this environment, the absence of a compelling narrative to drive price action is evident, following the XRP (lawsuit getting dismissed in part) news and pending review of ETF applications. Investors are keenly awaiting updates from the courts regarding Grayscale and the impending Mt Gox distributions; however, positioning for these events remains challenging, resulting in a cautious approach from market participants.

https://vegaxholdings.medium.com/a-ripple-of-relief-for-the-cryptocurrency-industry-july23-vegax-4c66f4bb9a56 

Over the weekend, Curve, the second-largest decentralized exchange (DEX), faced a substantial exploit, resulting in approximately $50 million being drained from several of its pools. This incident poses a potentially significant setback for the DeFi space and we believe is likely to reduce liquidity in the short term. Consequently, the Total Value Locked (TVL) on Curve witnessed a decline from $3 billion on Sunday to $1.7 billion on Monday, as investors withdrew capital from the affected pools. Consequently, the CRV token suffered a decline of 16%.

https://decrypt.co/150669/defi-exchange-curve-finance-confirms-various-ethereum-pools-hacked?amp=1 

Flows in major cryptocurrencies have displayed relative equilibrium, with both buyers and sellers engaging in passive trading– with no clear appetite to move prices in one direction. Furthermore, the market sentiment towards altcoins has shifted towards better selling prospects; however, the overall trading activity in this segment remains subdued.

NFT Market News:

Vera Molnár Releases NFT Project

99-year-old artist Vera Molnár’s computer-generated non-fungible tokens (NFTs) were sold for $1.2 million total. The NFT collection, named ‘Themes and Variations,’ was a collaboration with artist Martin Grasser and featured 500 unique digital artworks. The auction was conducted by Sotheby’s, and each NFT was sold for 631 ETH (equivalent to $1,178,520). Vera Molnár, a pioneer in computer art, explored letters in this project, adding a personal touch to her generative art. The NFT collection is a testament to her groundbreaking work in the art world.

https://cryptonews.com/news/nfts-created-by-99-year-old-artist-vera-molnar-sold-for-12-million.htm 

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking these developments in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Singapore’s High Court has deemed crypto as property in a case involving crypto exchange Bybit and a contractor. A court judgment published Tuesday declared crypto assets are property capable of being held on trust. 
• Amazon Managed Blockchain (AMB) now offers expanded Access and Query functions, providing users with faster application development using provisioned blockchain infrastructure. AMB Access allows serverless, scalable access to blockchains through standard remote procedure calls, while AMB Query enables access to blockchain data across multiple chains, starting with Bitcoin and Ethereum, via APIs. Potential use cases include custodial and wallet crypto applications, along with Web3 consumer engagement campaigns utilizing non-fungible tokens (NFTs).
• Worldcoin, the controversial crypto project co-created by OpenAI’s Sam Altman, announced the launch of its WLD token last week, following the project’s completed migration to the OP Mainnet. The project is among the crypto sector’s most divisive. Its focus is on helping people prove their identity online with credentials verified in person by iris-scanning orbs. More than two million people — the bulk of them in the Global South — have already been verified, and all of them stand to receive their share of the WLD token. The project aims to function as a fairly distributed cryptocurrency using biometrics as the basis of its distribution scheme.
• Lacoste is opening up a new virtual store for the summer. Created by retail technology developer Emperia, the digital rendition combines a more traditional immersive retail experience with elements exclusive to holders of Lacoste’s UNDW3 NFT passes.
• Ducati has announced the launch of its first-ever digital collectible on the XRP Ledger. The Bologna-based motorcycle manufacturer’s digital collectible will consist of a video sequence of Ducati logos on tanks of motorcycles produced since 1946.
• The Celo Foundation announced that Google’s computing cloud service, Google Cloud, is running a validator on the Celo network, joining Deutsche Telekom and other ecosystem contributors. 

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and providing public commentary.

• The House Financial Services Committee advanced a set of crypto bills after a landmark markup last Wednesday. Though the fallout from crypto exchange FTX loomed large over lawmakers as they worked toward ironing out the details of bills designed to provide a unified legal framework for crypto and address blockchain-related issues, a majority of lawmakers ultimately voted in favor of the Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act after a day-long markup session, referring both bills to the full House of Representatives for a vote. The bills would allocate more power to the CFTC in regulating crypto, in addition to recognizing that “digital assets that are not inherently securities may be offered as part of an investment contract but that does not make them securities.” While the bill faced several objections from committee members on both sides of the aisle, the committee’s chair praised the legislation noting it was the first time a committee was marking up crypto-specific legislation necessary to prevent the US from falling behind other countries in regulating crypto markets.

Disclaimer: The views and opinions expressed herein are those of the author alone and do not represent Wave Digital Assets LLC or any of its affiliates (collectively, “Wave”). The author and/or Wave may hold investment positions in some of the assets discussed. Nothing in this material or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. This material is not intended to provide accounting, legal or tax advice. Certain information contained herein has been obtained from third-party sources, has not been independently verified and should not be viewed as being endorsed by Wave. Such information is believed to be accurate as of the date of its publication. No representation or warranty is made, express or implied, with respect to the accuracy or completeness, and readers should not place undue reliance on the information contained or linked to herein. Certain statements in this material provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Past performance is not indicative of future results.

Wave is federally regulated by the US Securities & Exchange Commission as an investment adviser. Registration with a federal or state authority does not imply a certain level of skill or training. Additional information including important disclosures about Wave Digital Assets LLC also is available on the SEC’s website at www.adviserinfo.sec.gov. Or, learn more information about Wave at www.wavegp.com.