Casey Wagner

In a speech this week, European Central Bank board member Fabio Panetta called for broader taxation on crypto assets, which he likened to a Ponzi scheme. 



“The EU should introduce a tax levied on cross-border crypto issuers, investors and service providers,” Panetta said during the speech on Wednesday. “This would generate revenues that can be used to finance EU public goods that counter the negative effects of crypto-assets.”



Cryptoassets have become the “bubble of a generation,” Panetta added, citing “easy-money” scams and misrepresentations of return rates across the asset class.&nbsp;



The speech comes as the European Union advances cryptocurrency-related policy in Parliament. The industry is beginning to unpack what this may mean for the future. 



In November, the EU passed the Digital Operational Resilience Act (DORA), a bill that was originally proposed as a package with the Markets in Crypto Assets Regulation (MiCA), which is expected to pass into law before the end of the year. DORA is expected to be formally adapted in 2024.&nbsp;



DORA, designed to target cyber fraud and attacks, will require financial institutions, including crypto companies, to report any cyber-related security breaches or compromises. The law also requires tech firms providing cybersecurity resources to handle oversight.&nbsp;



The crypto industry has expressed concerns about how the law will impact third party, non-EU based companies, giving the legislation a global impact, Monica Oracova, chief operating officer and co-founder of the Naoris Protocol, said. 



“The framework principles set up by DORA…do not address the existing collection of single points of failure in cybersecurity systems today,” Oracova said. “Only by implementing a decentralized security mesh, removing the points of weakness, and adopting cryptographic controls, zero-knowledge proofs and reports in a decentralized ecosystem, will we be able to see real improvements.”



DORA’s policies, Oracova added, will likely not effectively prevent hacks or phishing attacks, but they could make business owners more accountable regarding the selection and enforcement of cybersecurity. 



When it comes to crypto, no amount of technological innovation is likely to satisfy Panetta, who warned, “regulation will not turn risky instruments into safe money.”



“Instead, a stable digital finance ecosystem requires well-supervised intermediaries and a risk-free and dependable digital settlement asset, which only digital central bank money can provide,” he added.



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Crypto’s ‘Easy Money’ Scams Need Tougher Oversight – ECB Board Member

Shalini Nagarajan

Bitcoin Cash proponent Roger Ver is once again feuding with an embattled crypto company over bad trades worth millions of dollars — this time, it’s bankrupt lender Genesis.



Genesis subsidiary GGC International filed a court summons in New York earlier this week, demanding Ver pay no less than $20 million to cover a set of crypto options, which expired at the end of December.



Ver, once referred to as “Bitcoin Jesus” for his BTC evangelism before staunchly supporting the Bitcoin Cash hard fork in 2017, says he won’t be paying up.&nbsp;



In a <a href="https://www.reddit.com/r/btc/comments/10ki2ll/did_roger_ver_get_rekt/" target="_blank" rel="noreferrer noopener">Reddit post</a> Wednesday, Ver claimed he has enough funds to pay Genesis, and even said he’d be “happy to pay,” but it’s Genesis that failed to hold up its end of the bargain.



“&#8230; Genesis was required by our agreement to remain solvent — as Genesis can’t ask its clients to play a ‘heads clients lose, tails Genesis wins’ game,” Ver wrote. He further claimed that he’d asked Genesis in June for assurances of its solvency, but didn’t receive what he wanted to know.



GGC International is a British Virgin Island company that facilitates crypto derivatives and spot trading, according to Genesis’ <a href="https://genesistrading.com/legal/regulatory-information" target="_blank" rel="noreferrer noopener">website</a>.&nbsp;



Genesis, itself a subsidiary of <a href="https://www.reuters.com/business/finance/who-is-barry-silbert-head-genesis-owner-dcg-2023-01-20/" target="_blank" rel="noreferrer noopener">Barry Silbert’s</a> crypto-conglomerate Digital Currency Group, <a href="https://blockworks.co/news/genesis-in-chapter-11-wont-insulate-silbert-winklevoss-says" target="_blank" rel="noreferrer noopener">filed for bankruptcy</a> last week, about two months after halting customer withdrawals and loan originations. But the concerned subsidiary itself hasn’t filed for bankruptcy just yet.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">On the topic of <a href="https://twitter.com/hashtag/Genesis?src=hash&amp;ref_src=twsrc%5Etfw">#Genesis</a>: <a href="https://t.co/2a0fYu5P3E">https://t.co/2a0fYu5P3E</a> <a href="https://t.co/a6tA0HISMo">pic.twitter.com/a6tA0HISMo</a>&mdash; Roger Ver (@rogerkver) <a href="https://twitter.com/rogerkver/status/1618270413435568131?ref_src=twsrc%5Etfw">January 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Blockworks has reached out to both Ver and Genesis for comment.&nbsp;



While it’s unclear whether <a href="https://www.offshorealert.com/ggc-international-ltd-v-roger-ver-summons-with-notice-failure-to-settle-20m-expired-crypto-options/" target="_blank" rel="noreferrer noopener">courts</a> will compel Ver to cover the expired options, this isn’t the first time he&#8217;s been challenged on trading debt.



Last July, he was entangled with a smaller platform, <a href="https://blockworks.co/news/coinflex-takes-legal-action-to-recover-84m-from-single-customer" target="_blank" rel="noreferrer noopener">CoinFLEX</a>, after CEO Mark Lamb accused him of owing the company $47 million in USDC after he failed to meet a margin call.&nbsp;



CoinFLEX later filed <a href="https://blockworks.co/news/coinflex-ceo-files-default-notice-against-bitcoiner-roger-ver" target="_blank" rel="noreferrer noopener">legal action</a> in Hong Kong against Ver, saying its estimated losses from Ver’s refusal to pay the debt, which had nearly doubled to $84 million.&nbsp;



Ver denied owing CoinFLEX and instead alleged the now-bankrupt exchange actually left him out of pocket.



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Roger Ver Says He Won’t Pay Genesis $20M For Bad Trades

Kevin Rose, the CEO and founder of Proof, fell victim to an apparent <a href="https://blockworks.co/tag/phishing">phishing</a> attack, with his hacked wallet estimated to have held rare NFTs worth millions. 



After the theft, Rose worked with OpenSea to ensure the stolen NFTs can’t be sold on its marketplace, but they can still be sold on another platform.



His wallet is said to have lost 40 NFTs on Wednesday, with <a href="https://opensea.io/KROVAULT/activity" target="_blank" rel="noreferrer noopener">data</a> on NFT marketplace OpenSea showing the assets were transferred to the attacker’s <a href="https://etherscan.io/tx/0x4ae899024f8bfcb3448364dc603db2e6ed4eab7b3a8649176230d7e33e644d44" target="_blank" rel="noreferrer noopener">wallet</a>.



Rose confirmed the hack in a late Thursday <a href="https://twitter.com/kevinrose/status/1618323487067869184">tweet</a>, saying he would share details soon as a cautionary heads-up. He may have lost assets upwards of $1.4 million including NFTs from collections like <a href="https://opensea.io/collection/autoglyphs" target="_blank" rel="noreferrer noopener">Autoglyph</a>, QQL Pass, Cool Cats, Damien Hirst’s The Currency, Admit One and OnChainMonkey, according to <a href="https://twitter.com/nftnow/status/1618325566889029633" target="_blank" rel="noreferrer noopener">nft now</a>. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Kevin Rose was just lost $2m+ in assets by signing an off-chain signature that created a listing for all of his OpenSea approved assets in one go. While seaport is a powerful tool, it can also be dangerous if you&#39;re not aware of how it works. A bit of context 1/🧵&mdash; quit (@0xQuit) <a href="https://twitter.com/0xQuit/status/1618335012176400384?ref_src=twsrc%5Etfw">January 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In a <a href="https://twitter.com/divergencearran/status/1618359162551009281" target="_blank" rel="noreferrer noopener">Twitter thread</a>, Proof’s VP of Engineering Arran Schlosberg broke down what exactly went down. He said Rose was tricked into signing a malicious signature that allowed the hacker to gain access to high-value tokens. 



Schlosberg didn’t mention what Rose thought he was signing, but the single misstep appears to have given the hacker his wallet credentials.&nbsp;&nbsp;



“This was a classic piece of social engineering, tricking KRO into a false sense of security. The technical aspect of the hack was limited to crafting signatures accepted by OpenSea&#8217;s marketplace contract,” Schlosberg wrote.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This was the one (and only) signature that Kevin Rose signed that cost him ~$2 million. <a href="https://t.co/fHbPb7vc6y">pic.twitter.com/fHbPb7vc6y</a>&mdash; 6457.eth (@JKrantz) <a href="https://twitter.com/JKrantz/status/1618338567327186945?ref_src=twsrc%5Etfw">January 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



He added that Proof’s assets, which mostly need multiple approvals for access, were not impacted.



OpenSea didn’t return Blockworks’ request for comment by press time. 



<h3>The NFT phishing problem</h3>



Blockchain sleuth ZachXBT <a href="https://twitter.com/zachxbt/status/1618360113190031360" target="_blank" rel="noreferrer noopener">claimed</a> that the same hacker who took control of Rose’s NFTs stole 75 ETH ($121,000) from another victim on the same day. The hacker then allegedly used crypto exchange FixedFloat to convert the stolen funds to bitcoin, before transferring them to a bitcoin mixing service to conceal the origin of funds.



Another crypto enthusiast who goes by the name ‘foobar’ on Twitter <a href="https://twitter.com/0xfoobar/status/1618328914119790594" target="_blank" rel="noreferrer noopener">suggested</a> how such a hack could have been prevented. They recommended a technique known as “wallet siloing,” which involves segregating different wallets for different purposes, and keeping valuable NFTs away from any active hot wallets. This would block the assets from being listed on NFT marketplaces without separate selling approval — a loss of convenience, but a defense against the sort of trap Rose fell into.



Use of a browser extension such as <a href="https://www.joinfire.xyz/" target="_blank" rel="noreferrer noopener">Fire</a>, that translates opaque smart contract code into recognizable actions, would also have tipped off Rose that something smelled fishy before it was too late.



This story was updated on Jan. 26, 2023, at 5:25 a.m. ET with additional detail.



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Lessons From Proof Founder Kevin Rose’s $1.4M NFT Phishing Experience

Bessie Liu

Uniswap is looking to “deploy everywhere,” according to a sizable delegate, as the DEX looks to double down on its already dominant market share.



Deploying on a number of Web3-oriented blockchains via Uniswap v3 has been the&nbsp;decentralized crypto exchange’s (DEX) latest move to bolster that effort.&nbsp;



The recent uptick in blockchain deployment proposals likely stems from Uniswap v3’s business source license (<a href="https://github.com/Uniswap/v3-core/blob/main/LICENSE" target="_blank" rel="noreferrer noopener">BSL)</a> expiring in the next few months, according to Getty Hill, the co-founder of the delegate, GFX Labs.



When Uniswap’s previous iteration, v2, first launched, opportunities abounded to fork its code&nbsp; and launch copycat protocols on different chains, Hill said.&nbsp;



“They would just copy and paste the code, launch and slap their own token on it,” Hill told Blockworks.



Binance’s popular BNB chain is now one of the most recent — and one of the most prominent — such protocols under consideration. Participants in Uniswap’s decentralized ecosystem have been in favor, considering some 80% of <a href="https://blockworks.co/price/uni" target="_blank" rel="noreferrer noopener">UNI</a> (Uniswap’s token) holders on Tuesday voted in favor of the “temperature check” around the decision.&nbsp;&nbsp;



Uniswap v3 focuses on concentrated liquidity; it deployed on Ethereum mainnet in May 2021; and it has consistently ranked <a href="https://dune.com/hagaetc/dex-metrics" target="_blank" rel="noreferrer noopener">first</a> in its slice of overall market share.&nbsp;&nbsp;



<h3>UNI holders behind proposals&nbsp;</h3>



The product has since been rolled out on a growing number of protocols new to its platform, including Arbitrum, Optimism (<a href="https://blockworks.co/price/op" target="_blank" rel="noreferrer noopener">OP</a>), Polygon (<a href="https://blockworks.co/price/matic" target="_blank" rel="noreferrer noopener">MATIC</a>) and Celo.



In an effort to <a href="https://blockworks.co/news/uniswap-holders-vote-on-governance-shakeup-to-avoid-bad-ideas">sidestep Uniswap’s previous woes</a> this time around, according to Hill, the protocol likely made the decision to attach the BSL. Meaning, in other words, that commercial uses of the code would require consent from Uniswap’s community.&nbsp;



“But in April, the gloves come off — and, at that point, it would be free reign for anyone to deploy and use [the code] whichever way they want,” he said.&nbsp;



It all adds up to a bit of a free for all. 



<blockquote class="wp-block-quote">
“So, the strategy that [we] came to the conclusion with is that — small chain, big chain, bad chain, good chain — we’re deploying everywhere — because it’s much harder to fork the protocol if there’s already a Uniswap v3 deployment there.&#8221;
</blockquote>



Deploying on other chains has so far borne fruit for Uniswap. After launching on Polygon for three months, the protocol managed to capture almost 50% of its market share.&nbsp;



Erin Koen, ​​head of asset management at Avantgarde Finance, said that a number of Uniswap’s proposals in progress are poised to likely benefit the DEX itself — as well as the chain chosen for Uniswap deployment.&nbsp;



Drawing on BNB as an example, Koen said it’s crucial that Uniswap captures trade volume on those chains, especially as the <a href="https://blockworks.co/news/uniswap-fee-switch-pilot">DEX eventually turns on its fee switch</a>. Avantgarde Finance is another Uniswap delegate and acts as the lead maintainer of the Enzyme protocol, a blockchain infrastructure that allows for non-custodial, third-party management of pooled assets.&nbsp;



“Eventually, we want to turn Uniswap into a protocol that can sustain itself,” Koen said. “Rather than just rely on this admittedly massive treasury … If there’s volume happening somewhere, we want to be a part of it,” Koen said.&nbsp;



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Uniswap Leans Into Multichain Future — Kinda

After selling 75% of its bitcoin holdings in 2022, electric car manufacturer Tesla opted to hold its remaining supply through the fourth quarter, SEC filings show. 



In July 2022, Tesla reported it <a href="https://blockworks.co/tesla-sells-bitcoin-for-profit-still-posts-impairment-loss">sold 75% of its bitcoin</a> for $936 million in the second quarter. The sale marked the first change Tesla has made in its bitcoin holdings since the <a href="https://blockworks.co/tesla-has-not-bought-or-sold-crypto-since-q1-2021">first quarter</a> of 2021, when the company acquired some 43,200 bitcoins for $1.5 billion.  



“We are certainly open to increasing our <a href="https://blockworks.co/tag/bitcoin">bitcoin</a> holdings in the future, so this should not be taken as some verdict on bitcoin,” CEO <a href="https://blockworks.co/tag/elon-musk">Elon Musk</a> said during the company’s 2022 second quarter earnings call on July 20, 2022. “It’s just that we were concerned about overall liquidity for the company, given Covid shutdowns in China.”



In its fourth quarter earnings report, Tesla reported no losses on its remaining bitcoin holdings.&nbsp;



<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">Bitcoin’s price</a> fell during the fourth quarter after remaining fairly stable during the second quarter. The selloff was largely driven by FTX’s collapse, but since the start of 2023, bitcoin has shown signs of a rebound and is up close to 40% year to date.



In October, during the company’s third quarter earnings call, Musk maintained Tesla is open to increasing its bitcoin exposure in the future. The CEO also said Tesla has held its <a href="https://blockworks.co/price/doge" target="_blank" rel="noreferrer noopener">dogecoin</a>, currently the only cryptocurrency the electric car company accepts — although only for a limited <a href="https://www.tesla.com/support/dogecoin" target="_blank" rel="noreferrer noopener">selection of products</a>, not including vehicles. 



“The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties,” Tesla’s third <a href="https://www.sec.gov/Archives/edgar/data/1318605/000095017022019867/tsla-20220930.htm" target="_blank" rel="noreferrer noopener">quarter report</a> noted. “For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable.”



This is a developing story.



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Tesla Held All Its Bitcoin Through Crypto Market Turmoil

Ben Strack

A majority of financial advisers plan to maintain or increase their clients’ exposure to crypto despite the extreme market volatility seen last year.&nbsp;



About 15% of advisers said they allocated to crypto in client accounts in 2022, according to a survey by Bitwise Investments — down from 16% in 2021.&nbsp;



But nearly 80% of advisers who currently have a crypto allocation in client accounts plan to keep or boost those in 2023. Still, allocations remain small, as 95% of advisers with crypto exposure weight 5% or less to the segment.



Those who aren’t invested in the space don’t show much willingness to get involved. More than half of advisers named regulatory uncertainty, volatility and failures of centralized institutions as barriers to greater adoption.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="621" src="https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-1024x621.jpg" alt="" class="wp-image-44696" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-1024x621.jpg 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-300x182.jpg 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-768x466.jpg 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-1536x932.jpg 1536w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-424x257.jpg 424w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-430x261.jpg 430w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-361x219.jpg 361w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart-80x49.jpg 80w, https://cms.blockworks.co/wp-content/uploads/2023/01/Bitwise-Survey-Chart.jpg 1734w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Chart by Bitwise</figcaption></figure>



The survey collected the responses of 491 advisers, including registered investment advisers (RIAs), broker-dealers, financial planners, wire house representatives and institutional investors.&nbsp;



Responses were gathered from Nov. 25 — two weeks after crypto exchange FTX <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing">filed for bankruptcy</a> — to Jan. 6.



Christopher King, the CEO of crypto-focused separately managed account platform Eaglebrook Advisors, previously told Blockworks “<a href="https://blockworks.co/news/eaglebrook-ceo-advisors-the-lowest-hanging-fruit-for-crypto-market">the lowest-hanging fruit</a>” for crypto is the $30 trillion wealth management market.&nbsp;



Bitwise Chief Investment Officer Matt Hougan said in a statement that the latest survey findings show crypto is “one of the best business development opportunities in the financial advisor market.”



&#8220;Ninety percent of advisors report fielding questions from clients, and a majority say they have clients who invest in crypto outside the advisory relationship,” Hougan said. “2023 is the year to bring those investments in-house.”



Advisers’ willingness to continue allocating to the segment comes despite a bearish short-term view on crypto’s asset, as 63% of respondents believe the price of bitcoin will fall this year. Six in 10 advisers, however, think bitcoin’s price will be higher in five years, according to the survey.



<a href="https://blockworks.co/price/btc">Bitcoin</a>’s price was about $22,580 at 1:00 pm ET Wednesday, up nearly 7% in the past week. 



As for how surveyed advisers plan to offer exposure to the space to clients in 2023, the top choice is utilizing crypto equity ETFs.&nbsp;



Such investment products have become more prevalent, industry participants have said, in part because the SEC has not yet approved ETFs in the US that invest directly in bitcoin.&nbsp;



While <a href="https://blockworks.co/news/crypto-etfs-sank-in-2022">performance</a> for such ETFs was all over the map, all saw negative returns in 2022 as several segment-altering events rocked the crypto industry.



The largest blockchain ETF in the US is Amplify Investments’ Transformational Data ETF <a href="https://amplifyetfs.com/blok/?creative=614224715737&amp;keyword=blok&amp;matchtype=p&amp;network=g&amp;device=c&amp;campaignid=14388327036&amp;adgroupid=124949756063&amp;adid=614224715737&amp;gclid=Cj0KCQiAw8OeBhCeARIsAGxWtUxdcxUvwYIVM1aFp8xrETETmvGKO7VLcFYZpj9XrU7n--643QRX1sQaAkeYEALw_wcB" target="_blank" rel="noreferrer noopener">(BLOK)</a>, which has roughly $430 million in assets. Its top holdings include MicroStrategy — the largest public holder of bitcoin — Coinbase, Accenture, IBM, GMO Internet Group and SBI Holdings. 



BLOK is down about 42% in the past year, but is up 22% so far in 2023. Bitcoin meanwhile is down 39% from a year ago, but has gone up 36% year to date.



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Financial Advisers Mostly Unfazed by Crypto’s 2022 Volatility

As the price ratio of ether to bitcoin returns to pre-FTX collapse levels ahead of the Shanghai upgrade, bitcoin dominance has spiked, leaving traders speculating about what will come next.&nbsp;



<a href="https://blockworks.co/price/btc">Bitcoin</a>’s dominance has risen more than 9% since Jan. 10, peaking near 45% in Wednesday trading, according to <a href="https://www.tradingview.com/symbols/BTC.D/" target="_blank" rel="noreferrer noopener">data</a> from TradingView. The ETH/BTC trading pair has, by contrast, declined around 7% in the past week, as ether had retreated toward the bottom of a multi-month range.



In US dollar terms, bitcoin has fully recovered from its November FTX-fueled losses — with a clear break back above the $21,300 level, while ether was rejected at about $1,675, almost exactly at its local top on Nov. 4, 2022, just prior to FTX’s unwinding.



<a href="https://blockworks.co/price/eth">Ether</a>’s recent decline has analysts puzzled. 



ETH is still trading close to 30% higher since the start of the year, but the token has logged a loss of close to 7% in the past five days even as the <a href="https://blockworks.co/news/ethereum-devs-opt-for-withdrawals-in-march-and-nothing-else">Shanghai upgrade</a>, which will allow users to withdraw staked ether, has been confirmed for late March.&nbsp;



Bitcoin options markets are seeing more activity versus ether options, Noelle Acheson, editor of Crypto is Macro Now and former head of market insights at Genesis, <a href="https://noelleacheson.substack.com/p/wednesday-jan-25-2023?sd=pf" target="_blank" rel="noreferrer noopener">wrote</a> Wednesday, as seen by growth in open interest. 



“Given the uncertain price outcome of what looks like a major event that will happen in March (if the current time frame holds), it is odd that there is less activity in ETH options than in BTC options,” Acheson said. “BTC has no ‘big events’ coming up within the next few months that we know of, and yet its implied volatility…has risen recently to practically match that of ETH,”&nbsp;



Bitcoin, which is up close to 40% year-to-date, has remained more stable in recent days, trading relatively flat over the past week.&nbsp;



“I&#8217;ve seen a lot of chatter within the crypto space that bitcoin is just poised for a breakout right now, which might be why it seems stronger as compared to ETH,” Katie Talati, director of research at Arca, said.



<blockquote class="wp-block-quote">
“There are also some concerns around ETH with withdrawals coming that there could be selling pressure, but realistically, we aren&#8217;t going to know until we get there,” Talati added.&nbsp;
</blockquote>



Stablecoin dominance has also retreated after spiking amid the FTX collapse, data from <a href="https://www.blockworksresearch.com/data?category=stablecoins&amp;chart=stablecoin-dominance" target="_blank" rel="noreferrer noopener">Blockworks Research</a> shows. The trend could potentially signal risk appetite for native cryptos is back, but Talati, cautions putting too much weight behind one indicator.&nbsp;



“[Stablecoin dominance] is not the perfect proxy, because you don&#8217;t really know who’s redeemed or who&#8217;s just taking their money offline,” Talati said. “I would say the high stablecoin balances that we saw during the FTX saga, that is definitely a sign of risk-off, for sure.”&nbsp;



Other indicators to keep an eye on, Talati said, are stablecoin balances on exchanges and flows between exchanges, as well as flows between decentralized exchanges. The macroeconomic environment is of course playing into risk across markets, too, she added.



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Ether Price Is Losing Ground Against Bitcoin

NFT marketplace Blur has quickly become a primary trading venue since its October launch.



<a href="https://dune.com/sealaunch/NFT" target="_blank" rel="noreferrer noopener">Rivaling</a> OpenSea — the largest NFT marketplace by trading volume and daily active users — Blur currently commands around 32% market share, with OpenSea at nearly 49%.



While OpenSea is a singular venue, Blur also serves as an NFT market aggregator. It’s now the largest by far with more than 70% of the market, per a Dune Analytics <a href="https://dune.com/hildobby/NFTs" target="_blank" rel="noreferrer noopener">dashboard</a> (aggregators allow NFT browsing across multiple platforms simultaneously).


<div class="wp-block-image">
<figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="527" src="https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-1024x527.png" alt="" class="wp-image-44680" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-1024x527.png 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-300x154.png 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-768x395.png 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-1536x790.png 1536w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-2048x1053.png 2048w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-428x220.png 428w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-470x242.png 470w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-389x200.png 389w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-18.59.05-80x41.png 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Chart by @hildobby</figcaption></figure></div>


Sara Gherghelas, a researcher at blockchain analytics unit DappRadar, told Blockworks that the recent increase in trading volume on Blur is likely correlated to the upcoming launch of the BLUR token on Feb. 14 and its third and final airdrop.



<h3>Incentivizing NFT trading</h3>



Blur has planned for a total of three airdrops since its launch, recently inspiring regular weekly trading volumes around $98 million.



Its initial airdrop rewarded so-called “care packages” to users who actively traded NFTs during the bear market — to claim, traders simply had to list an NFT on its platform. Care packages are meant to be eventually exchanged for BLUR.



A similar approach was implemented for the second airdrop — where users were rewarded for listing NFT sales on its Blur.



Its final airdrop, which is planned to occur alongside its token release, will distribute more than twice the number of care packages. Users are also able to tally reward points based on their bidding activities.&nbsp;



“It’s worth noting that bids do not have to be accepted to earn points towards Airdrop 3, which helps prevent wash trading and inflation of points,” Gherghelas said.&nbsp;



<h3>Blur wants to be a platform for pro NFT traders</h3>



Airdrops are not the only reason for higher trading volumes on the Blur platform.&nbsp;



Blur is a space designed for seasoned traders. These folks already boast higher trading volumes than a typical retail trader, Oskari Tempakka of Token Terminal told Blockworks.



“If you look at the data available on Token Terminal, OpenSea has more daily active users than Blur, but Blur’s volume is higher because it is mainly used by more advanced traders,” Tempakka said.



The user experience of Blur is also extremely appealing to users and likely drawing attention from other NFT marketplaces with less complex features, Tempakka said. 


<div class="wp-block-image">
<figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="655" src="https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-1024x655.png" alt="Blur Challenges NFT Marketplace Top Spot" class="wp-image-44681" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-1024x655.png 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-300x192.png 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-768x491.png 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-1536x983.png 1536w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-2048x1310.png 2048w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-402x257.png 402w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-408x261.png 408w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-342x219.png 342w, https://cms.blockworks.co/wp-content/uploads/2023/01/Screen-Shot-2023-01-25-at-1.04.16-PM-80x51.png 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Screenshot from Blur</figcaption></figure></div>


This sentiment is shared by an NFT trader who goes by the pseudonym <a href="https://mobile.twitter.com/drew_gmi" target="_blank" rel="noreferrer noopener">drew</a>.



“You’re incentivized — three times, you have a fast user interface and 0% market fees or royalty fees — so the more you use it, the bigger your airdrop will be — that’s why I think people gravitated towards Blur,” drew said.



<h3>An unknown future</h3>



A question remains: whether trading volumes will persist after the final airdrop in February, after which traders have received all their gifted BLUR.



“If the airdrop is successful and people get a lot of money, it usually causes a mini bull market or at least a spike in volume and buying — but after that, if there are no incentives to bid at high prices — there is a chance it could all come crashing down,” drew said.&nbsp;



Tempakka, on the other hand, remains cautiously optimistic about the NFT platform. He told Blockworks that Blur’s founder previously estimated that more than 90% of the platform’s trading volume was organic.&nbsp;



LooksRare, the NFT market’s previous darling platform, also pushed to inspire traders with lucrative rewards paid out via a native token. Reports quickly <a href="https://www.bloomberg.com/news/articles/2022-04-05/hottest-nft-marketplace-is-mostly-users-selling-to-themselves" target="_blank" rel="noreferrer noopener">surfaced</a> attributing upwards of 95% of its volume with wash traders eager to maximize those payouts.



But if Blur maintains similar trading volumes following its final airdrop, Tempakka expects more NFT platforms to follow its airdrop-heavy approach to incentivize usage.



“Time will tell how this plays out post airdrop, but I’m excited to see how things develop,” Tempakka said.



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NFT Marketplace for ‘Pro Traders’ Could Unseat OpenSea – But Will It Last?

John Gilbert

Gaming psychologists have long known that competition enhances motivation and engagement in gameplay. It is why so many developers aim to serve their most competitive players by adding complexity and higher stakes rewards to their upgrades.&nbsp;



But like all things, these upgrades suffer from the law of diminishing returns. In-game incentives grow stale and players venture off for new challenges.&nbsp;



Co-CEOs of Polemos Sascha Zehe and Richard McLaren both believe that blockchain-based asset ownership is a solution to this problem. Their new GameFi platform, <a href="https://forge.polemos.io/" target="_blank" rel="noreferrer noopener">Polemos Forge</a>, is helping all gamers make better use of this industry. They have an educational hub that helps players take advantage of new opportunities and will soon release an asset lending and asset staking library.&nbsp;



“For me, ownership is the important part. Ownership of assets is what’s going to drive the growth for web3 games compared to Web2 games,” Zehe said.&nbsp;&nbsp;&nbsp;



<h3>The impact on the competitive gaming industry</h3>



This type of ownership unlocks a new dimension of incentives for competitive gaming.&nbsp;



“If a player wins a weapon or badge that they are able to store in a self-custody Web3 wallet, then they get access to an endless list of ways to leverage that reward,” McLaren said.&nbsp;&nbsp;&nbsp;



While the value of this type of ownership is not limited to competitive games, many prominent game developers are using it in competitive environments.&nbsp;



<a href="https://forge.polemos.io/university/courses" target="_blank" rel="noreferrer noopener">Illuvium</a>, a AAA Web3 game still in development, has released Arena (Private Beta 2), which will allow players to battle against each other using assets and avatars (Illuvials) they own.&nbsp;



This competitive element is the first step of their full IBG (Interoperable Blockchain Game) launch and is already amassing a massive social following.&nbsp;&nbsp;&nbsp;



<a href="https://forge.polemos.io/university/courses" target="_blank" rel="noreferrer noopener">Shrapnel</a>, another AAA-quality blockchain game, is also integrating esports functionality in its own P2P (Peer-to-Peer) competitions and player-created tournaments. With the use of Shrapnel’s professional-grade creator tools, players can design their own combination of weapons and custom skins to use in matches against other players. These are high-stakes battles because players can either capture their opponent’s loot or lose everything.&nbsp;



While there is potential for disruption, both McLaren and Zehe explained that it is hard to measure industry-wide impact at this stage. “These fantastic games,” McLaren explained, “are still in development.” There need to be more active users to gauge how much transformative value NFTs can offer high-quality games.&nbsp;



Zehe added, “We need better games (like these) in Web3 that can leverage the value of blockchain ownership.”&nbsp;



When asked if GameFi has the potential to shake up esports, McLaren said, “Not yet, or certainly not outside the inherent gameplay and spectator appeal for the games. There might be interesting models for crowdsourcing prizes and tournaments, or for team sponsorships, but we haven&#8217;t seen anything there yet.”



The fact that GameFi is still in its infancy could be interpreted as good news for investors and players. It offers them the time to learn and investigate the games and strategies that could provide the most opportunity.&nbsp;



<h3>Correcting the mistakes of the past&nbsp;</h3>



McLaren emphasized the importance of evaluating in-game revenue models in relation to the quality of gameplay. “If there isn’t a balance of incentives, then games will struggle to acquire users beyond pure profit-making motives.”&nbsp;



For example, <a href="https://blockworks.co/news/axie-infinity-active-users-nft-prices-continue-to-decline-after-bridge-reopening">Axie Infinity</a>, a play-to-earn video game, has struggled to retain players during the global recession and crypto winter. In February 2022, the value of the in-game currency dropped by over 90% from its all-time high in July 2021, causing many players to stop playing the game.



But it is more than just a matter of imbalanced financial incentives. When asked why Ubisoft struggled to launch its <a href="https://blockworks.co/news/ubisoft-nft-efforts-are-off-to-a-rocky-start">Quartz NFTs</a>, Zehe said, “the industry as a whole suffers from a branding problem, and it&#8217;s called NFTs.” 



For those unfamiliar with the launch, in late 2021, Ubisoft introduced a new initiative called Ubisoft Quartz. It aimed to incorporate non-fungible tokens (NFTs) into games by turning in-game items into collectible player-owned assets. The first game to receive this treatment was Tom Clancy&#8217;s Ghost Recon Breakpoint on PC. Unfortunately, the initiative saw lackluster sales and backlash from the traditional gaming community.



McLaren explained that, “calling a game item an NFT is unnecessary jargon and what&#8217;s more, a somewhat discredited &#8216;dodgy&#8217; term. Adoption is going to need to be gentler and at players&#8217; own pace.”



He added, “NFTs will eventually make their way into AAA games, but they will most likely not be called NFTs. And the movement will be grassroots led.”



Facilitating community management and gaming lore is an important aspect of Polemos’ work with AAA-quality blockchain games like Illuvium and Shrapnel.&nbsp;



According to Zehe, “The openness of these communities to collaboration varies depending on the stage the game is in. In the earlier stages of development, it may be more difficult to collaborate, but as the game expands its exposure, it can lead to more opportunities for partnerships and marketing efforts. These can include things like trivia contests, live game sessions, giveaways, AMAs or the creation of educational content.”&nbsp;



In the case of Illuvium, the team even conducted an NFT collaboration, in which they announced a <a href="https://polemos.io/polemos-partners-with-illuvium-rpg-autobattler/" target="_blank" rel="noreferrer noopener">Polemos-branded Cosplay Illuvium Stabbin NFT</a> earlier last year.&nbsp;



Polemos is also making great efforts to build out its own platform’s lore, fantasy, universe, and background stories. They are finding creative ways to weave their storytelling into the work of their partners. This type of creative collaboration provides the backbone of gaming interoperability – and can ultimately open gaming NFTs to a new world of utility.



This content is sponsored by <a href="https://polemos.io/" target="_blank" rel="noreferrer noopener">Polemos</a>.



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A New Era of Ownership Is Changing the Nature of Competitive Games

Some crypto companies seeking to go public in the US have been held back by complex assessments led by the Securities and Exchange Commission (SEC).



Recounting plights of crypto exchange Bullish, stablecoin issuer Circle and online brokerage eToro, the Wall Street Journal <a href="https://www.wsj.com/articles/sec-scrutiny-blocks-some-crypto-firms-from-going-public-11674527071" target="_blank" rel="noreferrer noopener">highlighted</a> on Tuesday that each firm was unable to gain the required SEC approval.



They’d sought to go public via special purpose acquisition companies (SPACs) — existing “blank check” companies that merge or acquire other companies interested in assuming their public status.&nbsp;



The number of SPAC deals in the US exploded over the past few years, with 613 recorded in 2021 compared to 59 in 2019, per <a href="https://www.statista.com/statistics/1178249/spac-ipo-usa/" target="_blank" rel="noreferrer noopener">Statistica</a>. Going public via SPACs is generally <a href="https://advisory.kpmg.us/articles/2021/why-choosing-spac-over-ipo.html#:~:text=The%20main%20advantages%20of%20going,usually%20takes%2012%E2%80%9318%20months." target="_blank" rel="noreferrer noopener">regarded</a> as a speedier alternative to traditional initial public offerings.



While it hadn’t sought a SPAC deal, Galaxy Digital was similarly blocked by the SEC from listing on the Nasdaq, WSJ noted. Last April, a source told Blockworks that the listing process was taking <a href="https://blockworks.co/news/awaiting-us-listing-galaxy-digital-delays-purchase-of-crypto-platform-bitgo" target="_blank" rel="noreferrer noopener">longer than expected</a> (Galaxy stock already trades on OTC Markets).



So, what’s the hold up? It’s reportedly the number of questions posed to crypto companies by SEC regulators, who have so far found responses wanting.



Coinbase — practically the only pure-play crypto firm to go public (not counting bitcoin miners) — was reportedly sent three letters containing questions leading up to its April 2021 direct listing.&nbsp;



But Block.one’s Bullish was sent 10 letters in a review process extending beyond a year, WSJ said. Galaxy reportedly received one letter with more than 90 questions while Circle faced more than 100 questions. 



In eToro&#8217;s case, the SEC was said to have focused on the firm&#8217;s methods for accounting digital assets held by its users. &#8220;We continue to view becoming a public company as part of eToro’s future and will wait for the right opportunity to take this next step,&#8221; a spokesperson told Blockworks.



SEC chair Gary Gensler has <a href="https://blockworks.co/news/sec-under-gensler-crypto-power-grab-effective-protection" target="_blank" rel="noreferrer noopener">previously echoed</a> the stance of his predecessor Jay Clayton: regulators should consider most cryptocurrencies to be securities, and thus under the SEC&#8217;s purview. 



FTX’s collapse in November also seems to have exacerbated scrutiny. The SEC issued <a href="https://www.sec.gov/corpfin/sample-letter-companies-regarding-crypto-asset-markets" target="_blank" rel="noreferrer noopener">new guidance</a> that asked already-public companies to detail their risk exposure to the crypto sector. Circle <a href="https://blockworks.co/news/circle-kills-spac-plans" target="_blank" rel="noreferrer noopener">canceled</a> its SPAC deal in December. 



The lengthy review process has ultimately dampened efforts to generate capital via public offerings in a tough bear market, and further solidified the SEC as a major thorn in the industry&#8217;s side.



Updated Jan. 25, 2022 at 9:07 am ET: Added spokesperson statement.



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Why Aren’t There More Public Crypto Companies? The SEC

Sebastian Sinclair

Looking to the future, policymakers in Arizona referred an <a href="https://www.azleg.gov/legtext/56leg/1R/bills/SCR1007P.pdf" target="_blank" rel="noreferrer noopener">amendment</a> to the state constitution in the Arizona State Legislature last week, seeking to exempt digital assets from property taxation.



Following its second reading on Jan. 23, the resolution now has a small shot of making it to a ballot initiative. If approved by a majority vote in the legislature and subsequently passed by voters, the amendment would make crypto tax-exempt at the state level.



It would also make it one of the more favorable states for tax purposes, alongside Wyoming, which passed a law <a href="https://blockworks.co/news/daos-favor-classic-tax-havens-passing-up-crypto-friendly-us-states">recognizing a DAO’s legal status</a> as akin to a limited liability company. 



Arizona had originally toyed with the idea of making <a href="https://blockworks.co/news/arizona-considers-making-bitcoin-legal-tender">bitcoin legal tender</a> early last year, but that bill was subsequently <a href="https://legiscan.com/AZ/text/SB1341/2022" target="_blank" rel="noreferrer noopener">shelved</a> shortly after being introduced.



On a federal level, all individuals are required to pay income and capital gains taxes, but individual US states approach taxation differently, with some eschewing the concept of capital gains or personal income tax altogether at the state level.



Income tax at the state level is triggered when a user produces additional income deriving from mining, staking or airdrops, while capital gains (or losses) are triggered when a cryptoasset is disposed of on the basis of its cost basis and sale price.



Aside from Arizona, here are four other “friendly” states based on regulatory and tax advantages ahead of the federal tax filing deadline come April 18.



<h3>Wyoming</h3>



Wyoming, long-viewed as one of the country’s most progressive crypto regions, does not collect personal or corporate income tax. The state also began regulating the industry early on by introducing a financial <a href="https://wyomingbankingdivision.wyo.gov/banks-and-trust-companies/financial-technology-sandbox" target="_blank" rel="noreferrer noopener">technology sandbox</a> for testing financial products and services.



As mentioned, it formally legalized DAOs in 2019, allowing for clearer guidelines on how those entities would be taxed. Typically, LLCs don’t pay taxes on business incomes, but instead, members are required to pay taxes on their share of the LLC&#8217;s profits.



The state also passed its <a href="https://blockworks.co/news/legal-expert-avanti-may-face-uphill-battle-getting-fed-payment-access">charter for banks</a> dealing in digital assets back in 2019 making it possible for crypto firms to both hold customer cash deposits and custody crypto — later able to be traded on exchanges.



High electricity prices have caused some crypto miners to balk at setting up shop in the state, though Wyoming has recently attempted to tackle the issue by introducing two bills that may result in bitcoin <a href="https://blockworks.co/news/pro-crypto-wyoming-not-yet-pro-enough-to-attract-bitcoin-miners">miners paying less</a>.



<h3>Texas</h3>



Like Wyoming, Texas allowed for <a href="https://www.dob.texas.gov/sites/default/files/files/news/Industrynotices/in2021-03.pdf" target="_blank" rel="noreferrer noopener">chartered banks</a> to custody digital assets in June 2021, which was viewed at the time as a way to tap into the state&#8217;s booming domestic crypto market. 



Coinciding with its cheap electricity — beneficial to crypto mining activity two years ago — the state also features no income tax.&nbsp; Still, Texas does not recognize crypto as legal money and instead is concerned with the asset class as a taxable commodity on a transactional basis.



The state does not require firms, such as exchanges, to obtain a money transmitter’s license. It also passed its <a href="https://freemanlaw.com/cryptocurrency/texas/" target="_blank" rel="noreferrer noopener">Texas Virtual Currency Bill</a> in 2021 which provides a legal definition of digital assets. There is no income tax in the state.



Miners too benefit from a favorable framework that was put in place for firms to profit from 10-year tax abatements and tax credits, alongside additional state training for their workforce.&nbsp;



<h3>Florida</h3>



Florida, like Wyoming and Texas, does not feature a state income tax.&nbsp;



The state has a number of high-profile politicians opting for local crypto and blockchain regulation, including Miami Mayor Francis Suarez, who previously pushed for city residents to <a href="https://www.newsweek.com/miami-passes-resolution-allow-paying-city-workers-bitcoin-attempt-woo-big-tech-1568784" target="_blank" rel="noreferrer noopener">receive their paychecks</a> and pay for their property taxes in bitcoin.



While the state’s governor <a href="https://blockworks.co/news/desantis-says-florida-should-be-willing-to-accept-taxes-in-crypto">Ron DeSantis floated the idea</a> of allowing businesses to pay taxes using crypto to Florida’s Legislature’s 2022 session, his proposed measures failed to pass. 



As such, the state currently does not address the sales and use tax treatment of transactions involving crypto though, like Wyoming, a money transmission license is not required courtesy of changes made to <a href="https://www.flsenate.gov/Session/Bill/2022/273" target="_blank" rel="noreferrer noopener">House Bill 273</a>.



<h3>Colorado</h3>



Colorado, unlike other states listed, does tax income at 4.55% including wages and salaries deriving from crypto activity.&nbsp;



The outlier here is that Colorado is attempting to position itself as a crypto-friendly state by ensuring broader digital asset use cases for tax purposes.



In September of last year, Colorado’s Department of Revenue <a href="https://blockworks.co/news/colorado-residents-can-now-pay-state-taxes-with-crypto-for-a-fee">began accepting crypto as an additional form of payment</a> for all resident taxpayers, becoming the first US state to do so.&nbsp;



That includes individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax.



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These 5 Crypto-friendly US States Show Initiative on Tax Laws

Core Scientific was lent millions by top traditional finance institutions, a move that helped the cryptocurrency miner thrive and build out its business.&nbsp;



BlackRock and Apollo Global Management are among a group of creditors that lent the miner $500 million by purchasing its convertible notes, a <a href="https://cases.stretto.com/public/X217/12024/PLEADINGS/1202401182380000000128.pdf" target="_blank" rel="noreferrer noopener">court filing</a> published Jan. 18 showed. <a href="https://www.bnnbloomberg.ca/blackrock-apollo-among-creditors-lending-500-million-to-core-scientific-1.1874321" target="_blank" rel="noreferrer noopener">Bloomberg</a> first reported the news on Tuesday.



The miner managed to raise capital as BlackRock snapped up $38 million of convertible notes via subsidiary-managed accounts in August 2021, the report said. Apollo acquired $33.6 million between April and August that year.



They also contributed $17 million and $6.1 million respectively towards debtor-in-possession financing (DIP) last year, which would allow Core Scientific to continue running during bankruptcy.&nbsp;



The creditors, referred to in the court filing as an ad hoc group of DIP financing lending, also included Gullane Capital, multi-strategy investment firm Ibex Investors and ICG Advisors.



“The members of the Ad Hoc Group are either the beneficial holders of, or the investment advisors or managers to, funds and/or accounts that hold disclosable economic interests in relation to [Core Scientific],” the filing reads.



Other members holding Core Scientific notes are MassMutual, Corbin Capital Partners, Jordan Park Group, Kensico Capital Management, Marsico, Sabby Volatility Warrant Master Fund and Toroso Investments.&nbsp;



The largest creditor was Ibex, which lent Core $97.9 million in April 2021 and another $10.1 million towards the DIP loan.



Core Scientific <a href="https://blockworks.co/news/bitcoin-miner-core-scientific-to-file-bankruptcy-stock-tanks-30">filed for bankruptcy</a> last month after the company warned its cash resources would be exhausted by the end of 2022. Crypto miners struggled last year amid rising energy prices and broader macro trends affecting cryptoasset prices.



Earlier this month, the miner decided to <a href="https://blockworks.co/news/core-scientific-to-switch-off-celsius-miners-freeing-space-for-other-clients">free up hosting space</a> by letting go of bankrupt crypto lender Celsius as a client.



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Top TradFi Institutions Lent Millions to Crypto Miner Core Scientific

Coinbase stock has been on a tear this year, outperforming both the broader tech sector and bellwether digital asset bitcoin.



COIN is now up about 60% since the start of 2023, with a market capitalization of around $12.2 billion. The US-traded crypto exchange was changing hands for around $56 a share through Tuesday’s closing bell in New York.&nbsp;



US technology heavyweights have likewise benefited this month from long-awaited macro tailwinds that have slowed — if not reversed — 2022’s carnage across digital and traditional assets.&nbsp;



But not on Coinbase’s level.&nbsp;



A prominent dollar-weighted tech stock index, trading on the New York Stock exchange under the ticker <a href="https://www.bloomberg.com/quote/NYFANG:IND#xj4y7vzkg" target="_blank" rel="noreferrer noopener">NYFang</a>, has meanwhile recorded 16% year-to-date gains — leaving the index 44% behind Coinbase’s 60% pop over the same period. 



Not to mention that the NASDAQ-100 Technology Sector Index, a collection of equally weighted tech stocks, has also posted a smaller increase: around 11%.&nbsp;



The former index tracks the showing of some of the largest US tech equities, including Meta Apple, Amazon, Netflix and Google. Its performance has marked a notable rebound from its downturn last year — but one still much weaker relative to Coinbase.



COIN booked a slight decline in after-hours trading on Tuesday, dipping to $52.48, good for a -1.8% decline, <a href="https://www.nasdaq.com/market-activity/stocks/coin/after-hours-trades" target="_blank" rel="noreferrer noopener">data</a> show. Still, the exchange’s shares are up more than 23% compared to <a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">the price of bitcoin,</a> which has soared 37% year to date. 



Crypto’s blue-chip equity eked out a close above a previous daily high near $50 last week, its highest point in more than 40 days. It’s a welcome reprieve for the embattled exchange, which has taken hits from the broader industry sell-off that dragged down scores of its publicly traded digital asset peers last year, including crypto miners.&nbsp;



The collapse of the likes of Genesis, Three Arrows Capital, FTX and Voyager exacerbated selling pressure throughout 2022 amid concerns over the exchange’s path forward — and especially its correlation to shell-shocked digital assets.



Market participants by then had also grown wary of trusting centralized entities with their funds.&nbsp;



Speculation over the exchange and its stock came to a head by mid-December as it continued to post <a href="https://blockworks.co/news/coinbase-stock-hits-sixth-all-time-low-this-month" target="_blank" rel="noreferrer noopener">consecutive daily dips</a> before reaching an all-time low of $31.55 by Jan. 6.



Following a jump on Jan. 9 — which more or less coincided with several of bitcoin’s price spikes — exchange sentiment was bolstered by its agreement to settle with <a href="https://blockworks.co/news/coinbase-stock-up-after-settlement" target="_blank" rel="noreferrer noopener">New York state regulators</a>.



Coinbase CEO Brian Armstrong promised shareholders in August he would <a href="https://blockworks.co/news/coinbase-ceo-touts-subscriptions-to-curb-reliance-on-trading-fees" target="_blank" rel="noreferrer noopener">diversify his company’s revenue</a> by moving away from its reliance on trading fees. 



“It’s never as good as it seems, it’s never as bad as it seems,” Armstrong told CNBC at the time over questions on the macroeconomic outlook and the exchange’s financial conditions. “We try not to get focused on short-term ups and downs, we just zoom out.” 



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Coinbase Stock Crushing Blue-chip Tech Index by 44%

The recent resilience of so-called zombie tokens — coins that have risen from the dead after the collapse of their issuers — have shocked crypto traders of late.&nbsp;



The native tokens of Voyager, Luna, FTX and Celsius have now each outlived their troubled crypto parent companies.&nbsp;



FTX’s <a href="https://blockworks.co/price/ftt">FTT</a> is <a href="https://www.bloomberg.com/news/articles/2022-11-17/ftx-s-zombie-token-still-has-a-500-million-market-value" target="_blank" rel="noreferrer noopener">back from the dead</a>, up nearly 150% since the start of the year. And Voyager’s in-house token <a href="https://www.blockworksresearch.com/assets/vgx">VGX</a> has rallied more than 40% over the same period.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/12538332/embed#?secret=UpX7VVG97G" data-secret="UpX7VVG97G" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Zombie coins are all up at least 20% over the past month, but FTT is the clear winner | Chart by David Canellis</figcaption></figure>



Terra Classic (<a href="https://blockworks.co/price/lunc">LUNC</a>) — a separate token from the issuer’s <a href="https://blockworks.co/news/terra-collapse-could-spell-end-for-algorithmic-stablecoins">algorithmic stablecoin that collapsed last May</a> — has clocked a more than 20% increase since the first of the year. Celsius’ native <a href="https://blockworks.co/price/cel">CEL</a> has rallied around 40% in 2023, despite its bankrupt issuer.&nbsp;



Cryptoassets with “large short interest are vulnerable to spikes in price as borrowing costs become unsustainable to hold short positions,” according to Darius Tabatabai, Vertex Protocol’s chief executive. 



“You saw this with equities like GameStop…over the last couple of years, so it isn&#8217;t exclusive to digital assets,” Tabatabai told Blockworks in a statement. 



Crypto volatility is nothing new, but with fewer exchanges facilitating spiking transactions, analysts are wondering who the buyers are.&nbsp;



“By now, we are used to seemingly dead crypto assets experiencing a quick bout of volatility, but we had a bigger question: who is still market making for the FTT token?” Kaiko analysts wrote in a recent <a href="https://marketing.kaiko.com/ftt-returns-from-the-dead?ecid=AOKeC1Yuqk95Az7ww3D_iY4tg7BWg1_qXod0-WduJY7nRU04_st9djyqEniC0PF3ROWTbRBbz7Mn&amp;utm_campaign=Research%20newsletter&amp;utm_medium=email&amp;_hsmi=68069671&amp;_hsenc=p2ANqtz-_Q9LTIBhJXUD8sA9OJtK5jugKY3wJ5BRSdm2Vn7F_kFP3uSZrMi2RruEnYWyoOEE1l-AWixuERoknSJEHA-o7kna1yksgsZLhRvWLDnHlauky0yRk&amp;utm_content=68069671&amp;utm_source=hs_email" target="_blank" rel="noreferrer noopener">research note</a>. “The amount of risk is immense, and we can be sure that there are very few firms left willing to touch anything remotely related to FTX.”



<h3>Crypto pairs dislocated&nbsp;</h3>



FTT’s low trading volume — which <a href="https://blockworks.co/news/ftx-native-token-ftt-plunges-following-takeover-news">dropped off a cliff when the exchange went under</a> — and its dried-up liquidity has primed the token to rally, but there’s no evidence the run is set to be sustainable, according to the Kaiko analysts. 



When it comes to market depth for the tandem trading pair of FTT and Binance’s <a href="https://blockworks.co/price/busd">BUSD</a> pair, there was only a slight increase in the amount of FTT supplied to its <a href="https://www.investopedia.com/terms/o/order-book.asp#:~:text=An%20order%20book%20is%20an,%2C%20currencies%2C%20and%20even%20cryptocurrencies." target="_blank" rel="noreferrer noopener">order book</a>, according to Kaiko. That’s despite a large increase in price. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://twitter.com/search?q=%24FTT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$FTT</a> is up more than 120% since the start of 2023. What gives? Let&#39;s take a look at FTT order books to try and understand the zombie-coin&#39;s recent gains ⬇️ 🧵1/7 <a href="https://t.co/pmrXhIUpQ8">pic.twitter.com/pmrXhIUpQ8</a>&mdash; Kaiko (@KaikoData) <a href="https://twitter.com/KaikoData/status/1617471578094145536?ref_src=twsrc%5Etfw">January 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Through Tuesday morning in New York, the equivalent of just $160,000 FTT lies with 2% of the mid-price, the average amount between buyers and sellers, the report added.&nbsp;&nbsp;&nbsp;



&#8220;In our markets, we look more at perpetual swap rates, but the dynamic is much the same,” Tabatabai said. “Add in a general worsening of liquidity through a withdrawal of market makers and capital, and the likelihood for short squeezes such as the ones we are seeing in these assets will be increased.&#8221;



As interest has surged in the native token of <a href="https://blockworks.co/tag/celsius">Celsius</a>, the bankrupt lender is considering issuing a new token in order to make creditors whole, Celsius said in court Tuesday. The potential move would fall in line with previous maneuvers by Bitfinex, an exchange that issued tokens to customers victimized by a hack.&nbsp;



Celsius’ plan would first have to go through a vote from creditors — including customers with funds locked on its platform — but the company’s bankruptcy judge would ultimately make the final decision.



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Their Issuers Went Bankrupt, but These Tokens Have Survived

Michael Bodley

Ethereum’s native token, ether, has turned deflationary. Again.



What’s driving the latest shift is a combination of factors, according to <a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">Blockworks Research</a> analysts, previous reporting and crypto data providers. Among them:



<ul>
<li>NFT trading volumes picking up steam since the start of 2023 after a period of depressed activity. The result has been rising gas fees, which power transactions on the Ethereum network. That increase, in turn, has triggered “subsequent base fee burn” for traders, Blockworks Research analysts said. (Base fees set a floor for gas and are burnt, or removed from circulation, to control the availability of ether on the market.) </li>



<li>Lingering effects from the Merge, which transitioned the network from proof-of-work to proof-of-stake. A <a href="https://www.blockworksresearch.com/research/ethereum-roadmap-part-1-the-merge">Blockworks Research </a><a href="https://www.blockworksresearch.com/research/ethereum-roadmap-part-1-the-merge" target="_blank" rel="noreferrer noopener">r</a><a href="https://www.blockworksresearch.com/research/ethereum-roadmap-part-1-the-merge">eport</a> said the move was “undeniable” in terms of “the impact [proof-of-stake] has had on Ethereum’s supply.”</li>



<li><a href="https://twitter.com/WestieCapital/status/1613645213792366595" target="_blank" rel="noreferrer noopener">Ethereum’s pending Shanghai upgrade</a>, which is set to allow stakers that validate the blockchain’s transactions to withdraw their locked-up ether for the first time. </li>



<li>Ramped-up volatility in terms of trading ether, which has an impact on the native token’s overall supply. And <a href="https://blockworks.co/news/bitcoin-ether-prices-strong-markets-eye-easing-rate-hikes">bullish headwinds to start the year</a> for bitcoin, ether and additional cryptoassets.&nbsp;</li>
</ul>



<a href="https://blockworks.co/price/eth">Ether (ETH) was trading</a> around $1,600 as of Tuesday afternoon in New York, holding relatively flat on the day. That’s significantly up from the start of the year, when ether was trading in the $1,200 range. 



The cryptoasset — which has typically been inflationary — <a href="https://www.coindesk.com/markets/2022/11/11/ether-turns-deflationary-as-amount-of-eth-burned-spikes-amid-ftx-induced-market-volatility/" target="_blank" rel="noreferrer noopener">took a deflationary</a> turn in November 2022 for the first time since the Merge. It previously had become deflationary in November 2021 and has <a href="https://blockworks.co/newsletter/issue/30272045">flip-flopped at least three times</a> this month.  



<blockquote class="wp-block-quote">
“I strongly believe total ETH burn in the next cycle will be at least as great as the previous cycle,” said <a href="https://twitter.com/smyyguy" target="_blank" rel="noreferrer noopener">Dan Smith</a>, a senior analyst with Blockworks Research. 
</blockquote>



Ethereum has about 18 times more TVL (total value locked) than most layer-2 blockchains, according to Smith, which are “barely even [layer-2s] in their current state.” Ether now has a peak burn rate of -2.8% compared to its last bull run, he said, based on an analysis of on-chain data from Oct. 26, 2022 to Jan. 24, 2023.



READ MORE: <a href="https://blockworks.co/news/is-ether-deflationary-now-it-depends">The effect of Ethereum’s “security budget” on its inflation status</a>



NFT marketplaces OpenSea and Blur have <a href="https://dune.com/queries/1782186/2937163" target="_blank" rel="noreferrer noopener">burned more than 6,500 ETH</a> over the past month, contributing significantly to the inflation versus deflation narrative, per Blockworks Research. 



Added Smith: &#8220;While layer-2s showed continued innovation and adoption in 2022, they lack decentralization in their current state.”



Decentralizing elements such as <a href="https://blockworks.co/news/polygon-and-matter-labs-compete-on-zkevm-rollups">sequencers or provers</a> will come later in 2023 or 2024, developers say.



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Ethereum Merge a Factor in ETH’s Deflationary Turn

While enforcement actions against crypto-related entities aren&#8217;t anything new, industry participants said the recent <a href="https://blockworks.co/news/doj-busts-crypto-exchange">measures lobbied against exchange Bitzlato</a> show a persistent focus on controlling illicit activity in the sector — with a twist.



Law enforcement has, for the past 18 months, combatted what Ari Redbord, head of legal and government affairs at TRM Labs, called “the illicit underbelly of the overwhelmingly lawful crypto economy.”&nbsp;



The US Treasury department had implemented sanctions against crypto exchanges <a href="https://home.treasury.gov/news/press-releases/jy0364" target="_blank" rel="noreferrer noopener">Suex</a>, <a href="https://home.treasury.gov/news/press-releases/jy0471" target="_blank" rel="noreferrer noopener">Chatex</a> and <a href="https://home.treasury.gov/news/press-releases/jy0701" target="_blank" rel="noreferrer noopener">Garantex</a> within the last two years — each of which operated out of Federation Tower in Moscow, Russia.



These exchanges, while largely <a href="https://blockworks.co/news/doj-busts-crypto-exchange">unknown and considered insignificant</a> in crypto industry circles, <a href="https://blockworks.co/news/us-justice-department-to-launch-national-cryptocurrency-enforcement-team">have been prime targets</a> of US law enforcement aided by blockchain intelligence firms with government contracts such as <a href="https://blockworks.co/tag/trm-labs">TRM</a> and <a href="https://blockworks.co/tag/Chainalysis">Chainalysis</a>.



Garantex’s average monthly inflows, however, <a href="https://blockworks.co/news/ofac-sanctions-eased-crypto-crime">more than doubled</a> after the US took action against it last April, Chainalysis data showed, as Russia’s government did not enforce the sanctions.



Illicit crypto transaction volume overall rose for the second consecutive year in 2022, according to a Chainalysis <a href="https://blog.chainalysis.com/reports/2023-crypto-crime-report-introduction/" target="_blank" rel="noreferrer noopener">report</a> published earlier this month. Such activity hit an all-time high of $20.1 billion — up from roughly $18 billion in 2021.



Experts in illicit finance find the Bitzlato case more significant, according to Nick Smart, director of blockchain intelligence at Crystal, a compliance and risk management specialist.



“I think a lot of the reaction to Bitzlato has been a bit confused across the industry, and sort of misses why this is a bigger deal than at first glance,” Smart told Blockworks.&nbsp;



<h3>Treasury uses new tool</h3>



The Treasury’s Financial Crimes Enforcement Network (FinCEN) last week went a different route than sanctions. It identified Bitzlato as a “primary money laundering concern” pursuant to section 9714(a) of the Combating Russian Money Laundering Act — passed as part of the 2020 National Defense Authorization Act.



The designation came the same day the US Department of Justice (DOJ) <a href="https://blockworks.co/news/doj-busts-crypto-exchange">charged</a> Anatoly Legkodymov, a Russian national and senior executive of Bitzlato, with allegedly processing more than $700 million in illicit funds.



Bitzlato’s <a href="https://bitzlato.com/" target="_blank" rel="noreferrer noopener">site</a> has been shut down and could not be reached for comment. 



“OFAC sanctions are certainly one tool, but 9714 specifically targets Russian illicit finance,” said Redbord, a former senior adviser to the under secretary for terrorism and financial intelligence at the Treasury department.



This action is “very significant,” Redbord said, adding that it was the first designation under 9714(a), which allows the Treasury department to take severe action against a foreign financial institution to combat Russian money laundering.



French and US law enforcement authorities led the take-down of Bitzlato’s France-based digital infrastructure and interrogated platform managers, Europol said Monday.&nbsp;



About 46% of the assets exchanged through Bitzlato — worth roughly $1 billion — had links to criminal activities, Europol said. It added that roughly 1.5 million bitcoin transactions were made from Bitzlato users and the Hydra network, which the DOJ and German authorities took down in 2022.



Five individuals had been arrested as of Monday.



“[The] arrest of the founder, and with international cooperation in jurisdictions often enjoyed by Russian business people has a much bigger message,” Smart said, adding “particularly for other Russian P2P exchanges with similarly poor reputations, who must now be wondering ‘who’s next?’”



Money laundering service providers are crucial to the wider crypto crime ecosystem, according to Andrew Fierman, Chainalysis’s head of sanctions strategy.&nbsp;



“If cybercriminals cannot reliably convert the cryptocurrency generated by their activities into cash, the incentives to commit those crimes plummet,” he told Blockworks.



The powers granted under 9714(a) differ from traditional sanctions in that they provide FinCEN with a menu of special measures with which they can order financial institutions to comply. These range from information collection and record keeping, as well as prohibiting the opening of certain types of accounts or the transmittal of funds.&nbsp;



The special measures give compliance teams across the crypto industry valuable information to keep their platforms safe from illicit activity, Fierman said.



“This is also another proof point for the US government’s — together with their allies — ability to go after the Russian crypto crime ecosystem,” he added. “The overall disruption of the wider crypto crime ecosystem is what makes this action so significant.”



<h3>A sign of more to come?</h3>



Treasury Deputy Secretary Wally Adeyemo said in a statement last week that the designation marked a unique step taken only “a handful of times” in the Treasury’s history for what he called “some of the <a href="https://www.fincen.gov/resources/statutes-and-regulations/311-special-measures" target="_blank" rel="noreferrer noopener">most egregious</a> money laundering cases.”



The only other crypto-related entity the Treasury department designated a “primary money laundering concern” was Costa Rica-based Liberty Reserve in 2013. That was done under Section 311 of the USA Patriot Act.&nbsp;



Liberty Reserve founder Arthur Budovsky <a href="https://www.justice.gov/opa/pr/founder-liberty-reserve-pleads-guilty-laundering-more-250-million-through-his-digital" target="_blank" rel="noreferrer noopener">pleaded guilty</a> in 2016 to conspiring to commit money laundering.



“Because of its significant operations in, and connection to, Russia and Russian illicit finance, Bitzlato threatens US national security, the integrity of the US and international financial sectors, and businesses and institutions worldwide,” Adeyemo said. “Identifying Bitzlato as a ‘primary money laundering concern’ effectively renders the exchange an international pariah.”



Adeyemo added that “we will not hesitate” to expose and hold accountable virtual asset service providers going forward.



A Treasury department spokesperson declined to comment further.&nbsp;



Hacks on DeFi targets and cross-chain bridges last year resulted in a record $3.6 billion in stolen funds through November 2022, according to TRM Labs.&nbsp;



“This is certainly not the last time we will see the use of 9714 and similar authorities against non-compliant exchanges, darknet markets, darknet mixers — like Helix and Bitcoin Fog — and other money laundering concerns,” Redbord said.



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Bitzlato May Make Crypto Scoff, but Law Enforcement Thinks Otherwise

Index Coop, a company that designs structured products on Ethereum, has launched a Diversified Staked ETH (dsETH) index — a tokenized strategy that proponents say will provide its users with a more sustainable and less risky yield.



The <a href="https://indexcoop.com/blog/faq-the-diversified-staked-eth-index-dseth" target="_blank" rel="noreferrer noopener">dsETH index</a> allows holders to distribute their assets across various liquid staking protocols. ETH liquid staking tokens listed in the index’s initial launch include Lido’s stETH, Rocket Pool’s rETH and StakeWise’s sETH2.&nbsp;



Additional tokens will be considered if they meet certain <a href="https://gov.indexcoop.com/t/iip-171-launch-the-diversified-staked-eth-index-dseth/4389#h-60-methodology-15" target="_blank" rel="noreferrer noopener">public inclusion criteria</a>.



This latest product is a way for “all of the liquid staking protocols [to band] together against the centralized exchanges, who are also big players in the staking industry,” ecosystem growth lead at Index Coop, Crews Enochs, told Blockworks.



“We want to reward protocols that are more decentralized with a higher share of that index,” Enochs said.



For this reason, Coinbase’s cbETH which has a non-competitive fee of 25% and Frax’s frxETH, whose node operators are all run by the Frax core team, have been excluded from the Index.



<h3>A move to decentralize Ethereum staking</h3>



Since the successful completion of the <a href="https://blockworks.co/tag/ethereum-merge">Ethereum Merge</a>, the ecosystem has been concerned about the gradual <a href="https://blockworks.co/news/flashbots-has-a-new-plan-make-tradfi-look-embarrassing">centralization of its blockchain</a> — Lido, Coinbase, Kraken and Binance hold a total of 55% of all staked ether, according to <a href="https://www.rated.network/?network=mainnet&amp;view=pool" target="_blank" rel="noreferrer noopener">data</a> from Rated Network.



“We hope dsETH will positively influence the liquid staking market by rewarding the most efficient and decentralized protocols with higher allocations in the index token,” Dev, Index Coop’s head of growth, said in a statement.



Rocket Pool’s rETH currently <a href="https://dune.com/index_coop/dseth" target="_blank" rel="noreferrer noopener">tops the list</a> in the index token basket — making up 41.20% of the token’s allocation.



“We want liquid staking protocols to focus on their core products, decentralization and low fees, and not worry so much about marketing and business development and all those integrations,” Enochs said. “If you just have a good-looking staking product, you will get included in this index.”



Once a staking token is included in the index, it can be used as collateral on lending platforms such as Aave — protocols will not need to look for integrations themselves, Enochs added



In the case that a staking token in the index becomes vulnerable to an exploit, Enochs notes that only that particular token’s share of the index will be affected.&nbsp;



“I think a misconception some people have is they think if one of these liquid staking tokens has some sort of exploit and the price starts going to zero, the whole index will go to zero. But that&#8217;s not the case, because it&#8217;s not continuously rebalancing,” Enochs said. “It’s not like a liquidity pool — so in that sense, you do get that risk mitigation.”



The dsETH token will not be made available by Index Coop to users with US IP addresses, out of regulatory concerns. The tokens will, however, be trading on decentralized exchanges (DEXes) such as Uniswap.



<h3>Finding a market</h3>



Index Coop has a history of launching new and innovative DeFi tokens, but not all are successful in the market. Several indexes were discontinued last month, <a href="https://docs.indexcoop.com/index-coop-community-handbook/products/legacy-products/market-neutral-yield-eth-mnye" target="_blank" rel="noreferrer noopener">including</a> the recently launched <a href="https://blockworks.co/news/earning-yields-just-became-easier-with-index-coops-latest-token">Market Neutral Yield ETH (MNYe)</a> product.



Other tokens moved to <a href="https://docs.indexcoop.com/index-coop-community-handbook/products/legacy-products" target="_blank" rel="noreferrer noopener">“legacy” status</a> were the Web3 Data Economy Index (DATA) and half a dozen leveraged index products launched on Polygon.



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Fresh Ethereum Staking Index Wants To Promote Decentralization

Ren Yu Kong

Bridges

Hop Protocol: Entering the Cross-Chain Messaging War

Permissionless is the brainchild of Blockworks and Bankless. Over 5,500 people attended the inaugural event in 2022, making Permissionless the world’s largest DeFi conference.&nbsp;



What sets Permissionless apart? It’s a crypto native’s paradise, crafted specifically for both builders and investors who are dedicated to scaling the industry.&nbsp;



Permissionless is headed to Austin in 2023, and you know what they say… Everything is bigger in Texas.&nbsp;



Permissionless 2023 will feature the biggest names in Web3, a gargantuan exposition hall filled with the top brands in the space, an awe-inspiring NFT Gallery, inclusive, community-focused parties and events, metaverse experiences, and so much more.



See you in Paradise.

Tickets

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General Admission Pass

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Student tickets will be launching in early 2023

Student Ticket 

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Speakers

Erik Voorhees

Mary-Catherine (MC) Lader is the Chief Operating Officer of Uniswap Labs, a developer of foundational web3-based products and applications. In this role, she oversees the company’s growth efforts, strategic initiatives, and operations. Previously, she held various leadership roles at BlackRock, including as the Global Head of the firm’s digital sustainability business, Chief Operating Officer of the firm’s digital wealth business, and leader of the firm’s strategic fintech investments and blockchain activities. MC began her career as an investor in Goldman Sachs’ Special Situations Group. She received her J.D. and M.B.A. degrees at Harvard Law School and Harvard Business School, respectively, and her B.A. at Brown University.

Mary-Catherine Lader

Zaki Manian is a Co-Founder of Sommelier, the most powerful coprocessor yet for DeFi traders and Liquidity Providers. He’s also a Co-Founder of iqlusion, which provides infrastructure like a data center and a Cosmos validator for next-gen crypto technologies. Previously, Zaki helped build the Cosmos ecosystem, including launching the first public Cosmos testnet, and served as a director of Tendermint. Zaki has been a leading developer in the blockchain space since 2014, when he taught himself cryptography and began contributing to projects including Bitcoin, Ethereum, Zcash, and Tendermint. Having studied history of science at the University of Pennsylvania, Zaki’s skill sets in software engineering, programming, and computer science are largely self-taught.

Zaki Manian

Justin Drake

At Alluvial, Chief Growth Officer Mara Schmiedt focuses on advancing industry participation and adoption of Liquid Collective, seeking out world-class partnership opportunities, and overseeing Business Development, Sales, and other strategic functions. Mara recently joined Alluvial as Chief Growth Officer from Coinbase, where she served as the Head of Sales for Coinbase Cloud, the leading developer platform for blockchain-based infrastructure products and APIs. She expanded Cloud's staking business, supporting large-scale organizations, enterprises, and institutional investors. Prior to joining Coinbase, she managed Business Development at Bison Trails, a leading provider of blockchain-based infrastructure acquired by Coinbase in February 2021. Mara also served as Strategy Manager at ConsenSys, where she supported the strategic development of Codefi, the blockchain application suite for Web3 Commerce and Finance.



Mara is passionate about open-source technology and has published multiple research reports and papers on liquid staking, such as <a href="https://drive.google.com/file/d/13-s15SvCIUBukhSZiNkpd0sTff3izQ5G/view">The Internet Bond</a> and <a href="https://consensys.net/insights/eth-2-staking-ecosystem-report/">Ethereum 2.0 Staking Ecosystem Report</a>.&nbsp;



Additionally, she has led various industry initiatives, including leading the working group with the Ethereum Foundation that developed the Ethereum Launchpad and the first distributed validator technology (DVT) PoCs. Mara's deep experience in bringing technology and blockchain-based products and services to market — as well as her track record of building world-class business and sales organizations — bolsters Alluvial's support of Liquid Collective.

Mara Schmiedt

Stani Kulechov

Hasu

Christine is a Partner and Head of Digital Asset Strategy at Apollo Global Management, Inc. In this newly created position, Christine leads digital asset strategy across the firm, exploring more ways to apply blockchain technologies to Apollo’s business. She also plays a key role in Apollo’s strategy to invest in some of the most innovative digital asset companies and founders, with a specific focus on those transforming the financial services sector where Apollo can serve as a validator and enabler of new technologies. Previously, she was a Managing Director at J.P. Morgan and led its Blockchain/Crypto/Metaverse program through initiatives in digital assets, tokenized payments, internet of-things, decentralized identity, NFTs, and virtual worlds. She is a graduate of Brown University. Christine was named in Fortune’s The Ledger 40 Under 40 list of “the most impressive, young superstars transforming business at the leading edge of finance and technology.”

Christine Moy

Santiago Roel Santos (CryptoPunk #9159) is an investor focusing at the intersection of DeFi and the Web3 metaverse (NFTs/gaming). Most recently was a Partner at ParaFi Capital, one of the largest crypto funds specializing in DeFi. Prior to that, he was at Sageview Capital investing in Internet and software and, before that, at JP Morgan investment banking. Santiago began investing in crypto in 2012.

Santiago Roel Santos

Michael Anderson is the co-founder of Framework Ventures, one of earliest and largest VC firms to enter the “DeFi” or Decentralized Finance industry. With over $1B in AUM, the firm has since expanded into additional maturing verticals like blockchain gaming and social crypto. Prior to Framework, Michael and his co-founder Vance Spencer launched Hashletes, a digital collectible startup with official licensing from the NFL. Before entering crypto, Michael served as a product manager at both Snapchat and Dropbox, where he helped build out their monetization platforms.

Michael Anderson

Soona Amhaz is founder and GP of Volt Capital, a venture firm that focuses on pre-seed and seed companies in the digital assets space. Soona is also an advisor to On Deck, Forbes 30 under 30 in VC, and an alum from the University of Michigan School of Engineering.

Soona Amhaz

Colleen Sullivan is Co-Head of Ventures at Brevan Howard Digital. Prior to joining Brevan Howard Digital, Colleen co-founded and served as CEO of CMT Digital, where she was also a partner with the broader CMT Group and commenced activities in the crypto industry in 2013. Prior to starting CMT Digital, Colleen co-founded Sullivan Wolf Kailus, a boutique law firm that specializes in hedge fund, private equity, venture capital, digital assets, and other alternative investment products. Colleen also previously practiced law in the Investment Funds and Derivatives group at Sidley Austin LLP and, at age 25, co-founded a company called iOptions Group LLC, which developed hedging and monetization strategies for holders of employee stock options. Ms. Sullivan currently serves on the Advisory Board of the Chamber of Digital Commerce.

Colleen Sullivan

Tarun is an alumni of D. E. Shaw Research (DESRES), Vatic Labs, an HFT firm, and Cornell. He fell into the blockchain world in 2011, when he was working on ASICs at DESRES and observed Bitcoin ASIC mining rigs substantially delay DESRES’s ASIC production. He has spent the last seven years working on simulation-based R&amp;D at the intersection of high-performance computing and AI and is applying this knowledge to the blockchain ecosystem.

Tarun Chitra

Kevin Owocki is the founder of Gitcoin.co — Where builders &amp; funders come together to build the open web.  Gitcoin has delivered <a href="http://gitcoin.co/results">$50mm worth of value</a> to OSS devs in the last several years. He has a BS in Computer Science, 15 years of engineering leadership experience in Open Source Software and Web Startups. Kevin is a community organizer in the Boulder Colorado Tech Scene.

Kevin Owocki

Meltem Demirors is Chief Strategy Officer of CoinShares, a publicly listed investment firm that manages over five billion in digital assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem.



 An established veteran of digital asset investing, Meltem draws on her substantial experience and widespread influence to accelerate growth and acceptance of the asset class. Prior to joining CoinShares, Meltem helped build and grow Digital Currency Group, raising capital from the world’s largest corporations and managing a portfolio of 120 companies and 4 subsidiaries. Before she was bitten with the bitcoin bug, Meltem worked in the Oil &amp; Gas industry in trading, corporate treasury, and M&amp;A roles. 



Meltem has been recognized for her personal contributions to the industry and serves as an outspoken advocate. She is a founding member of the World Economic Forum Blockchain Council. Meltem teaches at her alma mater MIT as well as Oxford, and is passionate about privacy and civil rights.

Meltem Demirors

Vance is the co-founders of Framework Ventures, a thesis-driven venture capital firm whose team of technologists, researchers, and investors partner with founders and teams to build token-based networks and develop the requisite cryptoeconomics, governance, and community to scale.

Vance Spencer

Jim Bianco is President and Macro Strategist at Bianco Research, L.L.C. Since 1990 Jim’s commentaries have offered a unique perspective on the global economy and financial markets. Unencumbered by the biases of traditional Wall Street research, Jim has built a decades long reputation for objective, incisive commentary that challenges consensus thinking. In nearly 20 years at Bianco Research, Jim’s wide ranging commentaries have addressed monetary policy, the intersection of markets and politics, the role of government in the economy, fund flows and positioning in financial markets.



Jim appears regularly on CNBC, Bloomberg and Fox Business, and is often featured in the Wall Street Journal, Bloomberg News, Grants Interest Rate Observer, and MarketWatch. Prior to joining Arbor and Bianco Research, Jim was a Market Strategist in equity and fixed income research at UBS Securities and Equity Technical Analyst at First Boston and Shearson Lehman Brothers. He is a Chartered Market Technician (CMT) and a member of the Market Technicians Association (MTA). Jim has a Bachelor of Science degree in Finance from Marquette University (1984) and an MBA from Fordham University (1989).

Jim Bianco

Mr. Forman is the Founder and Managing Partner of ParaFi Capital. ParaFi is a leading investment firm focused on the blockchain and digital asset markets, and an early pioneer in decentralized finance (“DeFi”). ParaFi is one of the largest investors, users, and governance participants within the DeFi ecosystem, spanning the full network lifecycle from pre-launch to full decentralization. Mr. Forman serves as the Chief Investment Officer across the firm’s strategies, which include investing in public and private cryptoassets, systematic credit and market neutral DeFi strategies, and blockchain-focused venture capital and growth equity investing.



Prior to founding ParaFi in 2018, Mr. Forman spent 10 years at leading alternative investment managers, including KKR and TPG. While at KKR, Mr. Forman served as a Director in the Credit business, investing across a wide array of industry sectors and strategies, including distressed special situations, private credit, and opportunistic and liquid credit. Prior to KKR, Mr. Forman served as a Vice President with TPG’s former credit business, Sixth Street Partners, as one of the first investment professionals to join the platform, helping scale its private credit vehicle, TPG Specialty Lending, which listed publicly in 2014. Earlier in his career, Mr. Forman worked in private equity at Littlejohn &amp; Company and investment banking at Rothschild &amp; Co. Mr. Forman graduated with a B.A. in Philosophy, Politics and Economics, magna cum laude, from the University of Pennsylvania.

Ben Forman

Haseeb is a Managing Partner at Dragonfly. He was previously a partner at Metastable Capital, and has a background in software engineering at Airbnb and Earn.com (acquired by Coinbase).

Haseeb Qureshi

Vanessa Grellet is a Managing Partner at Aglaé Ventures. Vanessa is a Global Executive with over 20 years of expertise in the Financial Services and Tech industry. At Aglaé Ventures she manages the Web 3 focused fund. Prior to joining Aglae she has Head of Portfolio growth at CoinFund and Executive director at ConsenSys where she focused on driving adoption for Ethereum based products,  Strategic initiatives, Alliances and Channels.  She was involved in setting up the Enterprise Ethereum Alliance (EEA), the Accounting Blockchain Coalition (ABC) and the Blockchain for Social Impact Coalition (BSIC). Prior to ConsenSys she was a Strategy Executive at NYSE focused on investments and M&amp;A and a key member of PwC’s global wealth management team. Vanessa is a Founding Board member of AABC focused on Blockchain and Art, a member of the Advisory Council of ConsenSys, a Milken Institute Associate, a contributor to the  World Economic Forum Digital Future Council and part of <a href="https://cointelegraph.com/top-people-in-crypto-and-blockchain-2022/vanessa-grellet">Cointelegraph’s list of 100 most influential people for 2022</a>. Mrs. Grellet graduated Cum Laude from Law School (Paris II Assas) and Business School (HEC).

Vanessa Grellet

Mihailo Bjelic received his MSc in CS from the University of Belgrade. Prior to entering Web3/blockchain industry, he co-founded an AI/ML-powered platform for automotive industry and several other smaller startups and side projects. In 2017, he decided to join the Web3 movement full-time, primarily as a researcher interested in Ethereum scaling and multi-chain paradigms. In parallel with his work, he became one of the prominent Ethereum proponents and community members. In 2019, he started working on Polygon and conceptualized its architecture, vision and brand. In 2020, he joined hands with the Matic Network team and they have been working together on Polygon since then.

Mihailo Bjelic

Ben is a co-founder of Optimism, a leading Ethereum L2 ecosystem. He served as Chief Scientist before becoming a director at the Optimism Foundation. In his free time, he makes Ethereum-based parody songs under his stage name, Weird ETH Yankovic.

Ben Jones

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Speaker applications can be submitted <a href="https://form.asana.com/?k=L3gwAY1GRAX-RRAGDZYc0g&amp;d=1199885946213540">here</a>. Due to the high volume of submissions, we will not respond to all applicants. We anticipate &lt;2% of applicants being selected.
Blockworks&#8217; content team will reach out in the event you are accepted to speak. Please do not follow up directly.

Speaker Application

<h2>Why Sponsor Permissionless 2023?</h2>
If you’re serious about crypto, you have to be at Permissionless. Permissionless brings together DeFi builders, DAO participants, protocol developers, crypto companies, funds and institutions, and more. It’s a true crypto-native’s paradise, where you’ll have the opportunity to showcase your offerings and form lasting connections with the community.
We’ll work with your team to define the perfect sponsorship opportunity that best fits your needs and budget. Want to do something completely revolutionary? Our team can help design a bespoke package that brings your vision to life.
Get in touch with us at <a href="mailto:sales@blockworks.co">sales@blockworks.co</a>
&nbsp;