Industry Insiders Edition 4

Mandala Exchange

Mandala Exchange

Jul 25. 13 min read

Hello everyone! We are back with ‘Industry Insiders’, a dedicated biweekly newsletter that scours the internet to inform and educate people about what’s happening in the crypto world in an engaging and entertaining manner.

In this edition of the newsletter, we’re going to talk about:

👉 Ethereum co-founder Vitalik Buterin talks about the future of Ethereum

👉 USDC declares its reserve assets

👉 Elon Musk’s Tesla Sold 75% of Its Bitcoin Holdings

👉 Dubai’s ‘metaverse strategy’

The Future of Ethereum

The Ethereum Merge has a new target date. It could be coming as soon as September 19th if all goes well with the final test: Goerli.

The Merge will see Ethereum switch from the energy-intensive proof-of-work consensus mechanism to a more efficient proof-of-stake system. This means faster transactions, less energy usage, and one step closer to scalability. 

Here’s what the timeline is looking like:

Goerli Test Merge: week of August 11th (the final testnet!)

The Merge: week of September 19th

Recently, at the Ethereum Community Conference in France, Vitalik Buterin said that Ethereum is just 40% complete—and there’s plenty more coming after the “merge.” He shared his vision for future developments well beyond the network’s move to proof of stake. The Merge is just the first in a series of planned upgrades.

According to Vitalik, the roadmap is only 55% done after the Merge. There are 4 more stages: the surge, the verge, the purge, and the splurge are next. Once those are done Ethereum will be 100% complete with the roadmap. 

Here’s a simple breakdown of each stage:

The Surge: increasing scalability through “sharding” where the network gets split into pieces called shards to create smaller, faster, more manageable parts.

The Verge: optimize storage through Verkle Trees. This will reduce node sizes and help Ethereum become more scalable.

The Purge: reducing excess historical data. The goal is to decrease the hard drive space needed for validators and reduce network congestion.

The Splurge: making smaller updates to ensure everything runs smoothly from previous updates. Vitalik calls this “the fun stuff” since all the hard work is done by this stage.

“At the end of this roadmap, Ethereum will be a much more scalable system,” Vitalik said, “By the end, Ethereum will be able to process 100,000 transactions per second.”

USDC declared its reserve assets

Terra’s stablecoin UST shook up the entire crypto when it turned out to be not as ‘stable’ as people thought it was. It was an $18 billion stablecoin that went to ~$0 in one week. One of the primary reasons Terra collapsed was that it wasn’t backed by safe assets.

Stablecoins have been criticized for years for not transparently showing the reserves that back their stablecoin. Some people say Tether (the biggest stablecoin by market cap) is a potential risk for crypto if it turns out the reserves are not there.

 USDC, the 2nd biggest stablecoin in the world, with $55B in circulation, released data about the reserves backing their stablecoin.

  • $13.5B cash in banks (24.4%)
  • $42.1B in US treasuries (75.6%).

They have slightly more in reserves than the stablecoins in circulation. This is important because we need a trusted stablecoin to be able to transact in crypto. With USDC over 100% backed by cash + short-term treasuries, this should give people peace of mind. It’s also one of the main ways USDC makes money earning interest on their reserves. They’re projecting $351M in revenue for 2022.

Elon Musk’s Tesla Sold 75% of Its Bitcoin Holdings

Tesla boss Elon Musk has been among the most high-profile champions of cryptocurrency, with his pronouncements on social media often driving significant trading activity. Recently, Tesla’s Q2 report showed that Tesla sold 75% of its Bitcoin in Q2. 

Tesla sold $936 million worth of Bitcoin, for a $106M loss in Q1. Tesla purchased $1.5B worth of Bitcoin in February 2021. Despite the sell-off, Musk said that Tesla is open to increasing its coin holdings in the future and added that Tesla has not sold any of its Dogecoin.

Musk didn’t say much besides they were worried about lockdowns in China, wanted to increase their cash position and were concerned with the environmental impact of Bitcoin. Others suspect it’s because if they didn’t convert to cash then they would’ve had a negative cash flow quarter, which is bad for the stock price.

Dubai’s ‘Metaverse Strategy’

Dubai’s crown prince launched the ambitious Dubai Metaverse Strategy that aims to attract more than 1,000 blockchain and metaverse companies to the city as well as support more than 40,000 virtual jobs by 2030. The metaverse is expected to drive the UAE’s efforts to “provide innovative solutions, positively impact people’s lives, and transform the city into one of the smartest hubs worldwide offering new economic opportunities,” according to Omar bin Sultan Al Olama, UAE minister of state for AI and digital economy. According to the announcement, VR & AR, which facilitate the metaverse, are currently responsible for 6,700 jobs in the UAE, contributing around $500 million to the country’s economy. According to a 2020 PwC report, VR and AR technology could add $4 billion to the UAE economy by 2030. 

UAE is the latest jurisdiction to make a big metaverse play. In July, Chinese city Shanghai laid out its own strategy to build a metaverse economy worth 350 billion yuan (US$52 billion) by the end of 2025.

Nuggets from the cryptoverse📊

  • A bill giving CFTC (Commodity Futures Trading Commission) the power to regulate crypto as a commodity could go to vote later this year. Commodities are less regulated and are subject to fewer restrictions on who can invest. The bill is hugely popular in the crypto industry and could effectively disenfranchise the SEC. 
  • JPMorgan said crypto retail demand was growing, driven largely by reduced leverage in the system and increased demand ahead of the Ethereum Merge. 
  • Putin signed a law banning digital assets and utility tokens as a means of payment for goods, services and products in Russia. The amendment adds to the 2020 digital assets law which banned cryptocurrencies from being used in payments.
  • Curve Finance, the fourth largest DeFi protocol with almost $6 billion TVL, hinted the project may be launching an overcollateralized stablecoin. CRV rallied over 20% in 24 hours on the news.
  • The Texas GOP wants to add a clause to its state’s Bill of Rights that gives citizens the right to own, hold, and use whatever medium of exchange they choose, including digital currency. 
  • ETH broke $1.6k on Merge hype and a broader run-up in the equity markets. Global stocks had their best week in over a month, over speculation that the worst of the sell-off has passed.
  • Voyager, the crypto exchange platform that declared Chapter 11 bankruptcy, assured customers that its “FDIC insured” USD deposits would be returned in full, pending a reconciliation and fraud process. Voyager has $1.3 billion of crypto assets on its platform and claims against 3AC of more than $650 million.
  • 3AC founders Su Zhu and Kyle Davies made their first public statements since filing for bankruptcy. They say they are working with liquidators and are planning to relocate to Dubai.
  • California ended a four-year ban on crypto campaign donations for candidates in the state.
  • Lido Finance will support staking of its native stETH on L2 networks starting with Arbitrum and Optimism.
  • Genesis filed a $1.2 billion claim against insolvent hedge fund 3AC, after it was disclosed it had issued $2.36 billion in undercollateralized loans to the firm. The collateral was composed of shares in GBTC, ETHE, and AVAX tokens.
  • SEC’s Gary Gensler called out general ‘non-compliance’ across the crypto industry, and said the agency would continue to develop its regulatory framework. Gensler said the SEC needs to be “tech neutral” yet still protect the public. 
  • BlockFi had $1.8 billion of loans outstanding and $1.2 billion of assets at the end of Q2, a deficit of $600 million. $300 million of loans were to retail investors while $1.5 billion was to institutions.
  • The Treasury is asking the public for comments on the risks and benefits of cryptocurrencies, as it works on a response to Biden’s executive order on cryptocurrencies.
  • Matter Labs will launch zkSync 2.0 on mainnet in October. Matter Labs is the first to introduce a rollup that can handle any EVM smart contract.
  • The FBI issued a public warning about fraudulent crypto investment apps posing as legitimate that have stolen $42 million in 8 months between Oct 2021 and May 2022. 
  • Taiwan is banning crypto purchases using credit cards, and giving credit card firms 3 months to comply. 
  • Anthony Scaramucci’s SkyBridge Capital is raising a dedicated Web3 and crypto fund.
  • VC investments into crypto companies fell 26% y-o-y to $9.3 billion in the first half of 2022.
  • Adam Neumann’s crypto startup Flowcarbon is delaying the launch of its token as well as slowing operations due to bear market conditions. Flowcarbon’s tokens are expected to be backed by carbon credits and can be burned when the owner wants to offset emissions.
  • More than 48 projects previously built on the Terra network have begun migrating to Polygon almost two months after the implosion of UST. Polygon Studios raised a $20 million fund in May to assist Terra projects looking to switch blockchains.
  • Polygon’s MATIC token surged on the announcement that it was partnering with Disney to develop AR, NFT and AI experiences. Polygon is one of six companies participating in Disney’s 2022 Accelerator program where it will receive guidance from Disney’s senior leadership team.
  • Scalability protocol StarkWare confirmed it would be releasing a native StarkNet token to operate its ecosystem. The token will be required for governance, payment of transaction fees on StarkNet, and participation in its consensus mechanism. 17% of tokens are earmarked for StarkWare investors and a community airdrop is planned for next year.
  • Multicoin Capital raised $430 million for its 3rd crypto-focused fund.

From the World of Web3, NFTs & the Metaverse🔮

  • The floor price of the CryptoPunks collection topped $100k for the first time in 2 months.
  • NFT volumes fell 74% from May ($4B) to June ($1B). OpenSea represented 67% of the volume.
  • Minecraft banned NFTs from its platform, causing prices of NFT Worlds, a web3 project focused on third-party blockchain integrations in Minecraft, to fall 70%.
  • Epic Games said it would not ban NFT games from its store. Epic’s Store had 194 million users in 2021 and expects a number of NFT games to be released later this year.
  • Decentralized music streaming protocol Audius had $6M worth of its native AUDIO tokens stolen in a governance hack. The hacker was only able to get $1.1M ETH for the tokens due to slippage.
  • Animoca Brands is launching a gaming interoperability DAO called the Open Metaverse Alliance for web3 (OMA3). All blockchain-based metaverse companies are able to join the DAO.
  • Auction house Christie’s is launching a web3-focused investment fund called Christie’s Ventures.
  • Fans can now tip artists on music streaming service Audius using the native Audius token. 
  • 38% of all NFT and GameFi M&A deals since 2013 occurred in the first two quarters of 2022.
  • Video game retailer GameStop saw almost $3.5 million of trading volume on its NFT marketplace, which it launched with Layer-2 solution Immutable X.
  • A rare ape CryptoPunk sold for 2,500 ETH, or roughly $2.6 million. It’s the 32nd-rarest punk in the 10,000 edition collection, and was the fifth largest sale in the collection’s history. 
  • Yuga Labs released a litepaper for Otherside laying out the foundation for developers to build on the platform. Yuga also demoed the technology to 4,300 Otherside NFT holders, called “Voyagers”. 
  • STEPN, a Solana-based “move to earn” platform, reported $122.5 million in Q2 profits, up from $26 million in Q1. STEPN said 5% of the profits would be used to initiate a buyback and burn program for its native GMT tokens.
  • NFT and metaverse investor Animoca Brands raised $75 million at a valuation of $5.5 billion, doubling its value in less than 3 months.
  • A UK court ruling will allow legal documents to be served via NFTs. This is significant in crypto, where scams and hacks can often only be tied to wallet addresses.
  • Magic Eden, the largest NFT marketplace on Solana, is launching an investment arm to back web3 gaming companies.

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