Crypto Alpha Recap

#001 Edition, 27.10.2022

Oct 27, 2022

Is Uptober more than a meme? Yesterday over $1.2bn in crypto shorts was liquidated. While on Monday, the single largest liquidation event in history (~$600m) happened on FTX. Bitcoin left the lows of $18k, and ETH is again above $1400. Bank of Canada surprised with a smaller-than-expected rate hike, and new home sales in the U.S. continued to weaken. Enjoy the gains while you can. The macro hasn’t improved yet. All eyes will be on the Nov 2nd FOMC meeting.

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Chainanalysis published their latest Crypto Crime Report 2022. Illicit activity’s share of cryptocurrency transaction volume has never been lower (only makes up ~0.15% of all transactions).
Twitter is working on a wallet prototype that supports crypto deposits & withdrawals.
Rishi Sunak becomes the new UK Prime Minister. During his time as finance minister, Sunak unveiled plans to turn the country into an international hub for crypto.
a16z’s largest crypto fund loses 40% of its value in the first half of 2022.
Switzerland’s SEBA bank added an NFT custody solution to hold NFTs without managing private keys.
Facebook owner Meta reported its metaverse division Reality Labs posted a $3.7bn loss in Q3. That brings Reality Labs’ year-to-date losses to a staggering $9.4 billion.
Fidelity Institutional President Michael Durbin sees room for more crypto in consumer portfolios.

DeFi landscape:

USN is winding down. Due to the market crash, USN became undercollateralized. $40m is allocated by the NEAR Foundation for redemptions. Another case of why algorithmic stablecoins don’t seem to last.
Freeway a potential $100m rug? Trading halted amid market volatility, the team has been delisted.
MakerDAO community has approved a proposal that will let Coinbase keep custody of up to $1.6bn in USDC. The annual return will be 1.5%.
Sui Foundation announced the launch of a developer grant program ranging from $10,000 to $100,000 for eligible on-chain developers.
Merit Circle has voted to burn nearly $170m worth of its tokens. 200m of 1b tokens will be out of circulation.

NFT & Metaverse:

Reddit NFTs are exploding. The launch was done on Polygon and has 3m wallets created (OpenSea has 2.3m wallets). $100m+ market cap. That’s what adoption looks like.
Over $1.8b has been paid out to NFT creators, according to a new Galaxy Digital report. 482 NFT collections make up roughly 80% of all royalties. A heated topic, SudoSwap, and y2x2 are removing them.
Solana-based Metaplex plans to launch a new NFT asset class that can enforce on-chain creator royalties.
Newly released Apple guidelines prohibit NFTs as a means to bypass the in-app purchase mechanism.

Funding Highlights:

YOOM raised $15m from a star-studded investor list, including Jimmy Lovine (Interscope Records, Beats). YOOM’s volumetric technology allows the creation of photorealistic digital content and experiences for the Metaverse and Web3.
The VQF-regulated global settlement banking platform Arf, raised $13M in seed funding. Notable players like Coinbase, Solana, FTX, Circle Ventures, Stellar Development Foundation participated.
Celestia, building a modular consensus and data network, announced a $55m funding round. Led by Bain Capital, Polychain with the participation of Delphi Digital, Spartan Group, FTX, Jump Crypto, and Galaxy.
ChainSafe raised $18.5m in an oversubscribed Series A. Led by Round3 Capital with new investors such as Hashkey Capital.