Michael Bodley

<div id="highlights-block_625f1edd08acf" class="highlights">
 <ul>
 <li>The venture capital firm just started fundraising for its flagship vehicle</li>
 <li>Employing a Web3 focus, the strategy plans to key in on five verticals: fashion, finance, gaming, music and sports</li>
 </ul>
 
</div>



A longtime cryptocurrency proprietary trader is trying his hand in the venture capital space, according to sources familiar with the matter and marketing materials obtained by Blockworks.



Antonio Hallak is now in capital-raising mode for his Illumina Capital, a digital assets-focused venture firm with an incubator that keys in on token investments — not equity stakes.



The startup’s fundraising efforts are led by veteran hedge fund marketer Melissa Fox. She plans to raise between $50 million and $75 million for the launch, with backing from a number of institutional investors, sources said, including crypto natives and deep-pocketed traditional financiers.



Illumina’s flagship vehicle, Illumina Fund I, imposes a minimum investment of $1 million, but word is that would-be limited partners are already asking to chip in considerably larger amounts.



The plan is to raise a second fund shortly after the flagship is up and running.



Hallak confirmed the launch but declined to describe the startup’s strategy or share additional details. Indications are Hallak is favoring a token approach, in part, because of the increased liquidity it provides limited partners.



Such tokens typically change hands frequently on the secondary market. Illumina’s venture exits are expected to take between six to 18 months, according to the marketing materials — a considerably shorter duration than pure-play equity stakes.



Key to the venture is the incubator, Illumina Labs, a sister company to Illumina Capital. The entity guides startups from concept to whitepaper to tokenomics to finding their proper market fit, as well as crafting and performing security audits on smart contracts, among related functions.



In some cases, the firm’s investors can contribute to the incubator’s pipeline of startups — or even tap its services on their own accord. One investor, Inder Phull, CEO of music metaverse startup PIXELYNX, enlisted Illumina Labs to consult on his company’s tokenomics and broader blockchain structure.



PIXELYNX is now investing in the venture fund, which Phull told Blockworks is expected to produce returns that are “much more significant and meaningful from a token perspective, especially when you pick the right projects.”



“The returns are much more meaningful compared to traditional equity, where, maybe, one out of 50 companies make a meaningful edge,” Phull said.



There’s also a market-making component for freshly issued tokens run out of another Hallak affiliate, Weybridge.



Illumina Labs, the incubator, is set to have about 10 employees in the coming weeks and is expected to scale to 30 to 40 staffers before year-end, including engineers, smart-contract developers and tokenomics experts.



“One aspect of our approach that has been hitting the right chord with our portfolio companies is the fact that we&#8217;re not just a capital provider,” Hallak told Blockworks. “The accelerator, that’s the initial entry point…It shows we’re giving them the highest probability of success to get to launch.”



Hallak plans to employ a multi-vertical approach to focus on what he deems as an accelerating Web3 and metaverse evolution that will transform not only crypto, but also traditional industries. As such, Illumina plans to invest in sports, gaming, music, finance and fashion.



The token-only model allows Illumina to essentially divvy up chunks of investable capital within much larger corporations. If a long-running music label, for instance, is set to launch its first NFTs, the venture fund could back the token without having to purchase the label’s equity outright, which likely would be prohibitively expensive or perhaps already a public company.



The fund, with one exception, has so far backed new tokens from companies that have been around for 10 or 15 years, sources said — reflecting Hallak’s conviction in the <a href="https://cms.blockworks.co/tradfi-conference-organizer-hosting-first-crypto-event-to-meet-institutional-demand/" target="_blank" rel="noreferrer noopener">convergence of traditional business lines and digital assets</a>.



In another deviation from traditional venture firms, Illumina plans to take in limited partner checks upfront. Typically, funds drawdown on capital once they find an investment opportunity.



Another limited partner, gaming veteran Rudy Koch, co-founder of blockchain-based gaming startup Mythical Games, said the focus of the fund squarely hits the evolving needs of consumers.



&#8220;Web3 is creating this new consumer, who wants to be part of the value chain in whatever industry that is,” Koch told Blockworks. “We don&#8217;t want to be just consumers anymore — we want to be partners in the products we engage with. And tokenomics and DAOs are examples of ways that we can meet that goal, ways that we can bring consumers further into the value chain.&#8221;



Hallak — who prior to building out a number of quantitative crypto trading models led Credit Suisse’s electronic trading unit — will in the meantime invest the capital in a market- and delta-neutral, yield-generating strategy designed to deliver annual returns in the low double-digits.



The fund plans to back 20 to 30 early-stage token projects in all. The vehicle’s investment committee imposes a maximum 20% allocation to any one token.



Limited partners have the ability to invest via crypto and receive in-kind contributions once the fund winds down. Hallak, Fox and Chief Financial Officer Carey Harrold, formerly of Jump Trading, are now working to finalize the firm’s service providers.



The venture side of the business already has a head of human resources, as well as a head of recruitment tasked with filling a number of open seats, including operational roles and business development professionals.



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Wall Street Vet Launching Token-only VC Firm, Aiming for $50M to $75M

Bessie Liu

Roofstock, a property technology company focused on selling single-family rental homes, has completed its second on-chain property sale through Roofstock onChain (ROC), its Web3 subsidiary.



The property <a href="https://etherscan.io/tx/0xa7b2e89bf6d5cc8e605c1cf8823e532f87790d1816f7f98df77127cc98a1021f" target="_blank" rel="noreferrer noopener">sold</a> for $180,000 on an NFT marketplace built by Origin Protocol. It will be the first home to have been purchased on any NFT marketplace with on-chain leverage from DeFi lender Teller protocol.



Roofstock was not designed to be a blockchain project — but as the company grew, it saw the potential in blockchain technology and its ability to make single-family rental homes more accessible, Geoffrey Thompson, chief blockchain officer at Roofstock, told Blockworks.&nbsp;



Ultimately, he said, “what it boils down to is being able to transact a real-world home with one click using NFT smart contracts.”



<h2>So, how does it work?</h2>



The process of purchasing a property through the NFT marketplace is relatively simple, Sanjay Raghavan, head of Web3 initiatives at Roofstock, told Blockworks.



Following existing Web2 real-estate processes, a prospective buyer must purchase a real estate property and title it as a single-purpose limited liability company (LLC).&nbsp;



“The purpose of that LLC is to hold title for the property,” he said. “The Web3 part is creating an NFT that is associated with the sole ownership of this LLC — so, when people are selling the NFT on a marketplace, in essence, what is really happening is the ownership of that LLC changing hands.”



Read More: <a href="https://blockworks.co/news/your-guide-to-nft-platforms">The Top 8 NFT Marketplaces – Where To Buy NFTs</a>



To create an NFT, prospective buyers and sellers must mint membership tokens through a know your customer (KYC) check. Once a buyer is verified, their membership token, a non-transferable — sometimes known as “soulbound” — token, will reflect their verification status.



“The Web3 home is purchased on an NFT marketplace, but our smart contract checks to see if the buyer is KYC&#8217;ed for the transfer to go through. This is true for both primary and subsequent sales,” he said. “In addition, for subsequent sales, the property&#8217;s diligence info will need to be refreshed, after which the NFT is updated with a sellable flag.”



<h2>Legal compliance</h2>



Property NFTs by ROC follow an <a href="https://www.blockworksresearch.com/glossary#erc-721-token" target="_blank" rel="noreferrer noopener">ERC-721</a> standard, often used to represent the ownership of NFTs. 



Thompson notes that a large part of his initial efforts in the project was focused on ensuring that legal compliance was sufficient to allow for effortless property transactions.&nbsp;



“The NFT is associated with a single-member LLC that is member-managed,” Thompson said. “What it boils down to, effectively, is that the owner of the token makes the decisions about what happens to the house — if they want to rent it on a short-term basis using Airbnb, or if they want to rent it on a long-term basis — those are going to result in different economics.”



As the token does not meet the elements of the Howey four-prong test — a method used by the US Supreme Court to determine whether a transaction is considered an “investment contract” — it is not considered a security, Thompson said.



“In an investment contract, a passive investor relies on the managerial efforts of a sponsor or promoter to produce economic gains,” he said. “We avoid the securities laws by not promising returns for anyone and by not taking on management duties for people.”



<h2>Onboarding real-world assets to DeFi</h2>



Another benefit of bringing properties on-chain is the ability to now provide DeFi lenders with real-world asset collateral, Thompson said.&nbsp;



Roofstock partnered with Teller protocol to allow borrowers to raise loan requests and finance their purchases through <a href="https://app.usdc.homes/collections/roofstock-onchain-homes" target="_blank" rel="noreferrer noopener">USDC.homes</a>. 



Once a lender accepts the borrower&#8217;s request, the protocol will “permissionlessly [use] funds to purchase the LLC NFT,” then transfer the NFT to a smart contract escrow vault until loans and interests are repaid.



Buyers can make a down payment for a little as 20% of the value of the property. In the present case of <a href="https://app.usdc.homes/collections/roofstock-onchain-homes/asset/2" target="_blank" rel="noreferrer noopener">205 Cloverbrook Drive in Harvest, Alabama</a>, the borrower took out a two-year, $108,000 loan, at an interest rate of 7%. 


<div class="wp-block-image">
<figure class="alignright size-medium"><img decoding="async" loading="lazy" width="300" height="186" src="https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-300x186.png" alt="" class="wp-image-46412" srcset="https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-300x186.png 300w, https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-768x477.png 768w, https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-414x257.png 414w, https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-420x261.png 420w, https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-353x219.png 353w, https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM-80x50.png 80w, https://cms.blockworks.co/wp-content/uploads/2023/02/Screen-Shot-2023-02-02-at-12.41.09-PM.png 921w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption class="wp-element-caption"><a href="https://app.usdc.homes/collections/roofstock-onchain-homes/asset/2" target="_blank" rel="noreferrer noopener">205 Cloverbrook Drive in Harvest, Alabama</a> | Roofstock</figcaption></figure></div>


“The DeFi world is so much cleaner in terms of how financing can be done,” Raghavan said. “Financing can be instantaneous, so you don&#8217;t have to wait three, four weeks to send out pay stubs, bank statements, tax records and all these things to a lender who’s then sitting in underwriting for weeks.”



Using cryptocurrencies to finance real estate is an exciting development for DeFi, Matthew Liu, the co-founder of Origin Protocol, notes.



&#8220;More RWAs coming on-chain means that DeFi will see accelerated growth and TVL and other metrics will go up over time,” Liu said. “Conversely, we are showing that DeFi has a place in the physical world. Over time, we expect other RWAs like luxury handbags, watches, cars, commercial real estate, commodities, etc. to move on chain.&#8221;



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Roofstock Sells Alabama Rental Property Via NFT

Ben Strack

Crypto-related layoffs spiked in January, but the downturn didn’t stop a number of firms from touting their additions and appointments last month.&nbsp;



Digital asset job cuts hit 2,806 last month, according to <a href="https://www.coingecko.com/research/publications/crypto-layoffs-by-month" target="_blank" rel="noreferrer noopener">CoinGecko</a>, up from 649 in December — good for a 330% bad-news pop.&nbsp;



Consider that <a href="https://blockworks.co/news/coinbase-lays-off-950-staff-cuts-operational-costs-by-25" target="_blank" rel="noreferrer noopener">Coinbase</a> alone moved last month to cut an additional 950 staffers as part of the beleaguered crypto exchange’s latest attempts to cut down on bear market expenditures.&nbsp;



The sector’s January layoffs have already accounted for 41% of all 2022 crypto staff slashes. It is the second-highest monthly total — nearly reaching the 3,003 layoffs of last June after the collapse of Terra. And it comes as even blue-chip crypto companies continue to wade through the market’s churn that started in earnest in the fourth quarter with FTX’s implosion.&nbsp;



But reports of job cuts over the last few weeks have seemed to stall as the month turned (If we didn’t just jinx it, anyway!)



Crypto data and software provider Lukka hired <a href="https://www.linkedin.com/in/ian-hurst-ba143084/" target="_blank" rel="noreferrer noopener">Ian Hurst</a> Wednesday to head the firm’s European operations, expanding his role beyond the advisory position he has worked in for nearly two years.



A former general manager of global financial services at IBM, Hurst was also previously a partner at top consultancy Mckinsey &amp; Company.



The hire follows Lukka moving its headquarters to Zug, Switzerland, as well as its deal to support Bitcoin Suisse’s middle and back office operations — each signaling the company&#8217;s intent to increase its presence throughout the continent.&nbsp;



Bitcoin Suisse is an institutionally oriented crypto firm also based in Switzerland.&nbsp;&nbsp;



Arrington Capital — a firm that has invested in digital assets and Web3 since 201 — named <a href="https://www.linkedin.com/in/bhavik-patel-16704645/" target="_blank" rel="noreferrer noopener">Bhavik Patel</a> its chief investment officer.&nbsp;&nbsp;&nbsp;



Previously chief product officer and head of derivatives at crypto exchange BitMEX, Patel helped the firm’s founding team design its perpetual swap product.



Dubit, a developer of metaverse games and experiences, appointed <a href="https://www.linkedin.com/in/regine/details/experience/" target="_blank" rel="noreferrer noopener">Regine Weiner</a> as its head of studio Thursday.



Weiner joins from developer Mediatonic Games. She has also worked in senior roles at Space Ape Games, Nickelodeon, Cartoon Network and Disney.



Dubit has crafted metaverse experiences for Nickelodeon, the Grammys and Samsung — and the company recently said it’s rolling out Loooptopia, a Roblox-based world for the clothing brand H&amp;M.



<h2>What else did we miss?&nbsp;</h2>



Well, Anchorage Digital went on a bit of a spree, snapping up a slate of new executives in a push to focus on security and compliance.



See: <a href="https://blockworks.co/news/anchorage-hires-new-execs">Bank Secrecy Act Officer Amid Anchorage Digital’s Latest Hires</a>



New to the bank are Chief Compliance and Risk Officer <a href="https://www.linkedin.com/in/mark-dubose/">Mark duBose</a>, who formerly worked at Circle; Chief Information Security Officer <a href="https://www.linkedin.com/in/fweichelt/">Frieder Weichelt</a>, who joined from BitGo; and <a href="https://www.linkedin.com/in/dustinkpalmer/">Dustin Palmer</a>, a former senior advisor to general counsel at the US Department of Treasury. Palmer is in another privacy-oriented executive seat.&nbsp;



A non-crypto-focused bank, albeit with developing digital asset dealings, also appointed a new chief.



See: <a href="https://blockworks.co/news/bny-mellon-names-digital-assets-ceo">BNY Mellon Names Digital Assets CEO</a>



The world’s largest custodian bank named <a href="https://www.linkedin.com/in/caroline-butler-b489821/" target="_blank" rel="noreferrer noopener">Caroline Butler</a> to its CEO of digital assets post, a newly created role. Butler joined the company in 2020 and was previously CEO of BNY Mellon’s custody services.



Though details are scarce, the hire is one indication the financial services giant is looking to follow up on BNY’s launch of its digital custody and administration platform in the US for select institutional clients last October.



And as talk around crypto regulation continues, companies are looking to elevate their influence in Washington.&nbsp;&nbsp;



See: <a href="https://blockworks.co/news/mike-pence-nephew-binance-newest-lobbyist">Mike Pence’s Nephew Among Binance’s Newest Lobbyists</a>



Binance has registered three new lobbyists from legal counsel firm Ice Miller, according to a recent <a href="https://lda.senate.gov/filings/public/filing/6a74c35b-89fc-45bf-bebf-8535e2be9fdd/print/">filing</a> — John Pence, Jarrod Loadholt and Meagan Bolton.&nbsp;



Tether, Bakkt, a16z and Riot Platforms have also disclosed fresh lobbyist roles.



And we could be sharing updates from eBay on future Fridays, considering the digital marketplace is hiring specialists for its NFT marketplace KnownOrigin.



See: <a href="https://blockworks.co/news/ebay-nft-jobs-web3-knownorigin-amazon">EBay NFT Job Openings Hint At Web3 Showdown With Amazon</a>



Last June, <a href="https://blockworks.co/news/ebay-acquires-uk-based-nft-marketplace-knownorigin">eBay acquired UK-based KnownOrigin</a> for an undisclosed amount.



Rival Amazon, meanwhile, put up a job posting for a senior go-to-market <a href="https://www.amazon.jobs/en/jobs/2320871/senior-gtm-specialist-web3">specialist</a>, who would be responsible for growing adoption of Web3 workloads on its cloud computing division.&nbsp;



And don’t forget that Amazon is planning to <a href="https://blockworks.co/news/amazon-nft-marketplace-web3">launch an enterprise-grade NFT initiative</a>.

Latest in Crypto Hiring: Layoffs Spike But Turnaround Ahead?

In the latest draft of the Pregame Maker Constitution — Rune Christensen, the founder of MakerDAO — requests 20,000 MKR tokens ($14 million) to be dedicated to a Scientific Sustainability Fund.



The Pregame Maker Constitution is a work-in-progress document that will shape Maker Governance prior to <a href="https://blockworks.co/news/are-subdaos-the-future-of-dao-governance">the launch of SubDAOs</a>. The constitution will be a living document and be subject to updates and modifications.



In the <a href="https://forum.makerdao.com/t/wip-pregame-maker-constitution-mip-draft/19621">document</a>, Christensen notes that “MakerDAO will always share financial success with the world through charity that is distributed broadly and with thoughtful and genuine consideration of its impact.”



This practice would be implemented through a Purpose System, to be established by the Constitution and designed to allocate tokens to charities that will have a meaningful and verifiable impact.



Among the many charitable causes, Christensen highlights the importance of Scientific Sustainability — which he describes as a “core principle of the Maker Constitution that recognizes the unique, critical relationship between financial infrastructure and the global environmental risks of climate change.”



Stressing the catastrophic disasters that could result from climate change, Christensen empathizes that “immediate action is required,” and therefore asks DAO members to fund awareness campaigns and educational programs on energy solutions over decades.



“The Scientific Sustainability Fund is a temporary measure and will wind down and be fully replaced by the Purpose System in 2040,” he said.



Despite Christensen’s good intentions, MakerDAO Governance participant <a href="https://forum.makerdao.com/u/LongForWisdom">LongForWisdom</a> responded in the proposal’s <a href="https://forum.makerdao.com/t/wip-pregame-maker-constitution-mip-draft/19621/4">forum discussion</a> that the Constitution should not contain reasoning and only contain rules.



Though noting that explanations could be used in speeches or to convince someone to approve a proposal, he said, “it creates ambiguity that weakens the document as what is essentially part of a legal code.”



On Twitter, the proposal has also drawn critiques. Eden Au, a research director at The Block, <a href="https://twitter.com/0xedenau/status/1621209167381024768">tweeted</a> that, “Rune has gone full Effective Altruism.” With many other Twitter users noting that Christensen should “use his own money instead of the MKR treasury,” to achieve objectives that are arguably personal and political.



<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">Why doesn’t he use his own money instead MKR treasury&mdash; Popcorn Kirby 🚀 (@PopcornKirby) <a href="https://twitter.com/PopcornKirby/status/1621211268794421248?ref_src=twsrc%5Etfw">February 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Christensen’s passion for climate activism is well known. He previously published documents on MakerDAO’s governance forum on “<a href="https://forum.makerdao.com/t/the-case-for-clean-money/10684">The case for Clean Money</a>,” and has <a href="https://blockworks.co/news/rune-christensen-wants-out-of-maker">participated in earlier conversations</a>, stating that <a href="https://blockworks.co/news/makerdao-votes-in-favor-of-rune-christensens-endgame-plan">the Maker Endgame plan</a> is not only the last chance for the DeFi protocol — it could be the last chance for humanity, too.



Christensen did not immediately respond to Blockworks’ request for comment.

MakerDAO Founder Seeks $14 Million in MKR to Fight Climate Change

Casey Wagner

Friday’s jobs data showed the economy added far more jobs than analysts expected, putting the unemployment rate at its lowest in more than 50 years. 



It sent markets into a frenzy trying to decipher what this means for interest rates. 



Markets slipped on the news initially before recovering later in the trading session. The S&amp;P 500 and Nasdaq Composite indexes each lost around 1% before paring losses to around 0.3% each as of 10:30 am in New York. Cryptos also bounced back to the green, with bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) trading about 0.6% and 1.4% higher, respectively. 



The Federal Reserve opted to <a href="https://blockworks.co/news/federal-reserve-raises-interest-rates-25-bps" target="_blank" rel="noreferrer noopener">increase interest rates</a> a quarter of a percentage point Wednesday, noting that “peak employment” was still a top priority for the central bank. The market remains tight though, with the number of posted jobs per unemployed worker rising yet again in December, according to <a href="https://www.bls.gov/news.release/pdf/empsit.pdf" target="_blank" rel="noreferrer noopener">data</a> from the Bureau of Labor Statistics. 



“The past year the biggest risk to markets heading into each jobs report was that it would print ‘Too Hot’ and cause the Fed to hike rates even more than before and get more hawkish in its language,” Tom Essaye, founder of Sevens Report Research, wrote in a note ahead of Friday’s labor data release.&nbsp;



Markets were still pricing in an almost certain likelihood that the Fed would go for another 25 basis point interest rate increase in March, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html" target="_blank" rel="noreferrer noopener">CME Group data</a>. 



“But given Powell did not push back on the market’s expectations for just one more rate hike and two-to-three rate cuts in late 2023, it implies that the labor market is not as big a hawkish risk as it seemed because there’s been little progress on restoring balance in the labor market (the balance the Fed stated it desired),” Essaye added.&nbsp;



Coming off of an exceptional month for asset performance across the board, analysts are speculating how long cryptos can sustain their run. Bitcoin still has not managed to break the $24,000 level while ether continues to flirt around $1,600.&nbsp;



“January was a robust month for crypto and the FOMC decision helped keep all risky assets going higher,” Edward Moya, senior market analyst at Oanda, said. 



“Bitcoin is rallying as the post-Fed rally holds and global bond yields extend their declines. Bitcoin is riding this risk-on mood from Wall Street, but it might struggle to break above massive resistance from the $25,000 level.” 



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Jobs Data Crushes Estimates, Markets Rethink Fed Predictions

Silvergate’s stock inched higher early Friday as two of the world’s largest financial institutions have revealed growing stakes in the crypto bank in recent days.



State Street owned 9.32% of Silvergate stock as of Dec. 31, according to a Thursday <a href="https://www.sec.gov/Archives/edgar/data/93751/000009375123000093/Silvergate_Capital_Corp.txt" target="_blank" rel="noreferrer noopener">filing</a>.&nbsp;&nbsp;



The filing came a few days after a separate disclosure showed that BlackRock, the world’s largest asset manager, upped <a href="https://www.sec.gov/Archives/edgar/data/1312109/000130655023005093/us82837p4081_013123.txt" target="_blank" rel="noreferrer noopener">its Silvergate stake</a> to 7.2%.&nbsp;



Most of BlackRock’s position in the crypto bank is spread across a number of the fund manager’s ETFs, reflecting investor demand for exposure to indexes that comprise Silvergate.



BlackRock has roughly $10 trillion assets under management, while State Street manages about $3.5 trillion. The latter company also had nearly $37 trillion in assets under custody and administration at the end of 2022.  



Spokespeople for BlackRock and State Street declined to comment.



Silvergate stock was up nearly 2% on the day at 10:30 am ET Friday. Though down about 80% from a year ago, the stock is up about 20% so far in 2023.



Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-02-02/silvergate-faces-doj-fraud-probe-over-ftx-and-alameda-dealings" target="_blank" rel="noreferrer noopener">reported</a> Thursday that prosecutors in the US Justice Department’s fraud unit are investigating Sivergate’s dealings with bankrupt crypto exchange FTX and affiliate Alameda Research.&nbsp;



Silvergate CEO Alan Lane <a href="https://blockworks.co/news/silvergate-has-ample-liquidity">previously described</a> the bank’s due diligence process on FTX and Alameda in a December letter.



“When Silvergate received payments directed to Alameda Research and credited it to the account of the same name, this was consistent with the instructions from the sender of the wire and industry practice,” Lane said at the time.&nbsp;



A Silvergate representative declined to comment further.



The Bloomberg report came a few days after US Sens. Elizabeth Warren (D-Mass.), Roger Marshall (R-Kan.) and John Kennedy (R-La.) <a href="https://www.reuters.com/technology/silvergate-pressed-by-senators-after-evasive-responses-ftx-bloomberg-law-2023-01-31/" target="_blank" rel="noreferrer noopener">reportedly</a> sent a letter to Silvergate asking for details about its risk management practices and ties to FTX — following up on <a href="https://blockworks.co/news/crypto-bank-silvergate-asked-to-detail-records-of-purported-ftx-ties">a December inquiry</a>.



Silvergate disclosed last month <a href="https://blockworks.co/news/silvergate-stock-plummets-45-on-major-staff-cuts-massive-withdrawals">it was forced to sell assets</a> at a major loss during the fourth quarter to fulfill roughly $8 billion of customer withdrawals.



The crypto bank held $4.3 billion of short-term Federal Home Loan Bank advances, as of Dec. 31, according to a Jan. 5 company <a href="https://ir.silvergate.com/news/news-details/2023/Silvergate-Announces-Select-Preliminary-Fourth-Quarter-2022-Financial-Metrics-and-Provides-Business-Update/default.aspx" target="_blank" rel="noreferrer noopener">filing</a>. This funding <a href="https://blockworks.co/news/silvergate-home-loan-bank-advances">was used to satisfy outflows</a>, according to the company.



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State Street and BlackRock Boost Silvergate Stake. What Is the Stock Doing?

David Canellis

Ripple Labs’ XRP token has dropped 20% since the SEC sued the firm, and two top executives, over alleged unregistered securities sales back in December 2020.



And since then, Ripple Labs has poured billions of dollars into buying back the XRP token on secondary markets.



Some <a href="https://fortune.com/crypto/2023/02/01/despite-sec-litigation-ripple-sold-226-million-of-xrp-last-quarter-and-the-token-gained-21-last-month/" target="_blank" rel="noreferrer noopener">reports</a> have focused on Ripple Labs’ direct XRP sales in the fourth quarter of 2022. The move to acquire XRP tokens — ostensibly a bullish indicator — has been trumpeted as boosting the ecosystem’s liquidity.



Those reports often link the nearly $3 billion of in-house sales to XRP’s fast-moving 27% pump in January. They have propped up a narrative in which XRP’s latest revival has been made all the more notable by the fact that it’s played out with an uncertain, and, likely decisive, regulatory outcome hanging in the balance.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Those sales specifically refer to institutions and other corporate clients acquiring XRP from Ripple directly for use within its On-Demand Liquidity (ODL) network, a product pitched to help smooth the cross-border remittance process via XRP-powered crypto rails.



Blockworks compiled the full six-year history of Ripple Labs’ quarterly markets reports, stretching back to the inaugural edition in the fourth quarter of 2016.



Ripple’s direct XRP sales only tell one part of the story. It’s true that Ripple sold around $2.97 billion of XRP last quarter — on par with the previous period’s $2.82 billion — but the reality is that Ripple has appeared to push much of that money into buying XRP on public markets, per its own disclosures.



In total, Ripple Labs has publicly reported $11.1 billion in ODL-related sales from the beginning of 2021 until the end of 2022. Since then, the firm has shelled out nearly $8.4 billion throughout a sustained XRP buying campaign initially pitched to protect the token’s markets and its customers, averaging more than $1 billion per quarter.



Ripple Labs’ disclosures indicate the firm has, since the SEC’s charges, essentially recycled 75% of the revenue generated from direct XRP sales on buying its own token on secondary markets, and 67% of overall sales revenue from the start of 2016’s fourth quarter.



Blockworks reached out to several contacts at Ripple on multiple occasions with the specific details contained in this story, and did not receive any response.



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<h2>Ripple spends billions on XRP market ‘health’</h2>



Collating figures contained in each of Ripple’s quarterly market reports (including the most <a href="https://ripple.com/insights/q4-2022-xrp-markets-report/">recent</a>), across the six years of disclosures, Blockworks found that Ripple sold $12.55 billion in XRP directly to customers across that period.



Of that, $744.6 million was sold “programmatically,” a common term for selling on public markets, such as crypto exchanges.



Ripple stopped programmatic sales after the third quarter of 2019. No particular reason was given in the underlying <a href="https://ripple.com/insights/q3-2019-markets-report/">disclosure</a>. But the firm then said it was focusing on over the counter (OTC) sales with partners working in “strategically important” regions including EMEA and Asia.



The following year, Ripple said it was <a href="https://ripple.com/insights/q2-2020-xrp-markets-report/">focusing</a> “solely on its OTC sales as part of providing increased XRP liquidity to RippleNet’s ODL customers.” It described that liquidity as “vital” as ODL grows.



Ripple first disclosed that it was an XRP buyer on secondary markets in 2020&#8217;s second <a href="https://ripple.com/insights/q2-2020-xrp-markets-report/">quarter</a>, although purchase <a href="https://ripple.com/insights/q3-2020-xrp-markets-report/">figures</a> didn’t appear until the third quarter of that same year.&nbsp;



“A healthy, orderly XRP market is required to minimize cost and risk for customers, and Ripple plays a responsible role in the liquidity process,” Ripple <a href="https://ripple.com/insights/q2-2020-xrp-markets-report/">said</a> in Q2 2020.



<blockquote class="wp-block-quote">
“As more financial institutions leverage RippleNet’s ODL service, more liquidity is added into the XRP market. That said, Ripple has been a buyer in the secondary market and may continue to undertake purchases in the future at market prices.”
</blockquote>



To start, Ripple Labs was snapping up around $40 million per quarter, in Q3 and Q4 2020. It then took a break until Q4 2021, when it ramped up efforts significantly by spending $322 million.



Around $1.08 billion was spent in the first three months of 2022, then $1.71 billion in the following quarter. That expenditure jumped almost 50% in the quarter after that, when Ripple <a href="https://ripple.com/insights/q2-2022-xrp-markets-report/">reported</a> $2.5 billion in secondary purchases.&nbsp;



Last quarter, it spent $2.74 billion on XRP. The price of XRP, meanwhile, dropped by 30%.



Ripple described its buying campaign as a “near-term product solution” for an XRP lending operation <a href="https://ripple.com/insights/fund-instant-cross-border-payments-with-a-line-of-credit-from-ripplenet/">announced</a> in Oct. 2020.



The firm said in its Q3 2020 <a href="https://ripple.com/insights/q3-2020-xrp-markets-report/">report</a> that it was building “new ODL capabilities to dynamically source XRP liquidity from the open market, not just Ripple,” hinting that its XRP buys on secondary markets would eventually slow — but its budget for XRP buybacks has only increased.



<h2>Centralization and securities laws</h2>



The question of whether XRP and its underlying crypto infrastructure are sufficiently decentralized to avoid SEC scrutiny plagued San Francisco-headquartered Ripple Labs for years.



That debate culminated in the SEC’s lawsuit, which seeks to prove that purchases of the XRP token constitute investment contracts. Ripple Labs holds sway over the network and the value XRP, the regulator has argued, which would mean that its token offering falls under securities law per the Howey test.



Companies selling securities must register with the SEC and lodge regular financial disclosures, among other things, in order to provide reliable information on which investors can base their decisions.



In a landmark <a href="https://www.sec.gov/news/speech/speech-hinman-061418">speech</a> in 2018, William Hinman of the SEC noted that “If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.” He specifically named Bitcoin and Ethereum as tokens that met this standard. XRP’s omission from his speech was the first sign that XRP was potentially under the gun.



Still, decentralization is a spectrum, and there are many ways by which to <a href="https://blockworks.co/news/measuring-decentralization-is-your-crypto-decentralized">gauge decentralization of crypto projects</a>. Some relate to their technological underpinnings — how many validator nodes the network has, for example, and how they’re chosen.&nbsp;



Another is the centralization of supply; if one party holds too many tokens, they could wield outsized influence over markets.



In October 2022, Ripple <a href="https://twitter.com/bgarlinghouse/status/1585777993359642625">declared</a> that it — for the first time — owned less than 50% of the outstanding supply of XRP, which is currently about 50.8 billion ($21.08 billion). In 2017, that <a href="https://www.cnbc.com/2017/12/29/ripple-soars-becomes-second-biggest-cryptocurrency-by-market-cap.html">figure</a> was as high as 61%.&nbsp;



Ripple distributing XRP through its direct and ODL-related sales contributed to that reduction.&nbsp;



It’s difficult to gauge the actual market impact of Ripple consistently buying so much XRP over the past two years (it’s now the sixth largest digital asset by market value, in <a href="https://coinmarketcap.com/historical/20150101/">2015</a> it was the second-biggest behind bitcoin).



<h2>Buybacks common Wall Street practice</h2>



While order book depth is a fluid metric and changes rapidly, CoinGecko recently <a href="https://www.coingecko.com/en/coins/xrp#markets">place</a>d the 2% depth of Binance’s XRP/USDT market at about $2.3 million on the upside and $1.6 million on the downside — meaning bids of those sizes would shift XRP’s price 2% in either direction.&nbsp;



When averaged out on a daily basis, Ripple’s XRP buys over 2022 would’ve amounted to $22 million per day – more than 10 times the reported amount required to move the needle on markets. (Ripple disclosed sales were executed daily in its Q2 2017 <a href="https://web.archive.org/web/20220124004742/https://ripple.com/insights/q2-2017-xrp-markets-report/">report</a>, although no information has been given about the rate of purchases)



Ripple has openly telegraphed its buys. And, for what it’s worth, token buyback schemes are common in crypto markets. Crypto exchange tokens often <a href="https://blockworks.co/news/native-crypto-exchange-tokens-hint-at-first-sign-of-broader-market-recovery">acquire and burn their own token</a>s; crypto lender Nexo has been <a href="https://nexo.io/media-center/nexo-commits-additional-50-million-to-long-standing-buyback-initiative">running</a> buybacks for years, a move that has carried over to buzzy projects like <a href="https://twitter.com/blockworksres/status/1612056633718476801">BitDAO</a>.



(Ripple doesn’t burn XRP directly, instead its ledger automatically <a href="https://xrpl.org/transaction-cost.html">burns</a> a small amount for every transaction).&nbsp;



Token buybacks, while an unregulated process, mimic stock buybacks seen in traditional equities markets (which are all securities). Meta just <a href="https://www.cnbc.com/2023/02/01/facebook-parent-meta-announces-40-billion-stock-buyback.html">announced</a> a $40 billion buyback scheme which appears to have heavily influenced its recent 27% rally, despite somewhat lackluster earnings.&nbsp;



Stock buyback schemes are intended to return capital to shareholders. They can present their own <a href="https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-buybacks-mitigating-common-pitfalls/">concerns</a>, including executive compensation gaming and destroying long-term value propositions.



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</div><figcaption class="wp-element-caption">XRP has more-or-less tracked bitcoin since SEC filed its charges</figcaption></figure>



Whether XRP <a href="https://blockworks.co/news/ripple-sec-final-briefs-provide-case-summary">is a security</a> has yet to be determined. A ruling is expected sometime this year.&nbsp;



On Dec. 22, the day SEC filed charges against Ripple, co-founder Chris Larsen and CEO Brad Garlinghouse, the latter stated in a <a href="https://ripple.com/insights/the-secs-attack-on-crypto-in-the-united-states/">blog</a>: &#8220;Unlike securities, the market value of XRP has not been correlated with Ripple’s activities. Instead, the price of XRP is correlated to the movement of other virtual currencies.&#8221;



Crypto prices across the board indeed tend to correlate. But based on Ripple’s own disclosures, it’s clear the firm has been busy directly maintaining the “health” of XRP markets throughout its battle with the SEC — to the tune of billions — all while attempting to <a href="https://dfpi.ca.gov/wp-content/uploads/sites/337/2022/09/Ripple-comment-letter-8.5.22.pdf?emrc=4cdda7">disprove</a> its influence over XRP.



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Ripple Bought $8.4B XRP Since SEC Lawsuit ‘To Support Healthy Markets’

Reddit’s native cryptocurrency moons (MOON) has, well, mooned over the past month.



Currently trading at $0.13 per token, the cryptocurrency has soared by about 73% since the start of the year, <a href="https://www.coingecko.com/en/coins/moon" target="_blank" rel="noreferrer noopener">data</a> from CoinGecko show, with the caveat that there are few markets where it trades and liquidity is miniscule. 



Moons is a token built on Ethereum’s blockchain that powers the<a href="https://www.reddit.com/r/CryptoCurrency/" target="_blank" rel="noreferrer noopener"> r/Cryptocurrency </a>subreddit — an online forum for crypto enthusiasts to discuss — and, often, debate — their favored digital assets and related protocol projects. It’s also evolved into an industry hub to share notable news, often as emerging information impacts a token’s price and market capitalization.



Participating Redditors are rewarded with moons tokens, and the token is stored in the social platform’s in-house digital asset wallet.



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<h2>Moons&#8217; use cases </h2>



Moons can be used for a variety of purposes on Reddit, including the purchase of a membership to the r/Cryptocurrency forum for 466 moons a month. Subscribers also receive four new loyalty badges monthly and can include gifs in comment threads. 



The moons token also allows users to partake in polls and tip their peers on content shares, generally those perceived to add value for industry participants.



A Reddit user who wished to remain anonymous told Blockworks that they don’t recall when or why they opened their Vault on Reddit, but it was likely due to the fact that “it was there.”



The user said they have used the cryptoassets on a couple of occasions to tip helpful users. Reddit’s nascent crypto tipping mechanism adds an extra incentive for savvy posts on the forum in particular, they said.



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Another user, <a href="https://www.reddit.com/user/No_Scientist_7094" target="_blank" rel="noreferrer noopener">No_Scientist_7094</a>, told Blockworks that they view the token as similar to the Basic Attention Token (<a href="https://blockworks.co/price/bat">BAT</a>) — a blockchain system designed to reward users for their attention on websites via the web browser Brave, a popular pick for digital assets advocates concerned with digital <a href="https://www.coindesk.com/tech/2021/05/13/brave-integrates-crypto-blockchain-domains-expanding-access-to-web-30/" target="_blank" rel="noreferrer noopener">privacy</a>.



On Web2 platforms, if a user looks at ads, the company often pockets the ensuing revenue. But with the introduction of moons on Reddit, the user credited for bringing eyeballs onto the screen would earn money, they said.



“It&#8217;s a revenue sharing scheme…I hope it will expand and other platforms will use a similar setup,” they said.&nbsp;



No_Scientist_7094 said that the emerging ecosystem could also be used as pocket money, though they personally had yet to sell any of their tokens — and were not looking to do so for a long time.&nbsp;



“I just tip some here and there and use it to vote on new proposals,” they said.



<h3>Reddit&#8217;s r/Cryptocurrency succeeding where rivals failed  </h3>



The Reddit user <a href="https://www.reddit.com/user/Mr_Bob_Ferguson" target="_blank" rel="noreferrer noopener">Mr_Bob_Ferguson</a> told Blockworks that he had contributed to a slew of internet messaging boards, forums and platforms since the 90s. And there had never been an expectation for financial rewards until moons came along.



Despite other subreddits having attempted something along the same lines —&nbsp; and failed (BRICK is a prime example), the reward system has managed to pick up steam.&nbsp;



“Use-cases for moons are slowly building, beyond the initial ‘sub governance voting power,’ through to a new Moonplace.io site, and many are hopeful that Reddit will provide further official integration, such as allowing moons to be used to purchase the popular Reddit Limited Edition Avatars (NFTs) in the future on a marketplace,” he said. 



Companies are also using moons to pay for banner advertising and AMAs (ask me anything) in the sub, he said. “These payments are not insignificant, costing several thousand dollars.”



Moons tokens <a href="https://www.coingecko.com/en/coins/moon" target="_blank" rel="noreferrer noopener">currently</a> have a market cap sitting around $15 million, and Mr_Bob_Ferguson remains optimistic on the potential for the cryptocurrency to continue on its upward trajectory. 



<h2>One downside: ‘moons-farming’</h2>



Although the sentiment around the moons ecosystem has mostly been positive among Reddit community members, users said the token’s introduction also added more fuel to the fire of so-called “moons-farming” behavior.



The practice entails commenting merely for clout’s sake, rather than to contribute to advancing thoughtful discussion contributions.



“The Reddit voting system often doesn’t reward the highest effort content, but instead often low value content that follows a certain narrative,” Mr_Bob_Ferguson said. “For example, after the recent FTX collapse a simple comment of “they should be in jail” would always be rewarded more than a detailed, well thought out, reply.”



Even so, he said, the introduction of moons has upped his own personal engagement on r/Cryptocurrency.



“It is a highly unique way of rewarding users for content,” he said. “It feels as though this type of model may be the future for contributing on social networks.”



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Reddit’s Crypto Moons Upvote a 73% Surge in 2023

Shalini Nagarajan

Online marketplace eBay is looking to prop up its Web3 ambitions by hiring specialists for its NFT marketplace KnownOrigin.



Those who come onboard will be building an understanding of the market, championing the Web3 sector and improving go-to-market outcomes.&nbsp;



Not all roles require candidates to have crypto-native experiences, but a crypto counsel role is expected to bring legal experience in law related to NFTs, Web3 or blockchain.



Crypto <a href="https://www.linkedin.com/jobs/view/3462689513/" target="_blank" rel="noreferrer noopener">counsel</a> aside, LinkedIn postings from eBay show open spots a head of <a href="https://www.linkedin.com/jobs/view/3434316689/" target="_blank" rel="noreferrer noopener">community</a> at KnownOrigin, content <a href="https://www.linkedin.com/jobs/search/?currentJobId=3393201099&amp;f_C=1481%2C270603%2C3710655%2C6121%2C853612%2C78768%2C2340505%2C74513497&amp;geoId=92000000&amp;originToLandingJobPostings=3457213846%2C3457215686%2C3465525458%2C3434316689%2C3465523839%2C3434317651%2C3455923176%2C3428722174%2C3393201099" target="_blank" rel="noreferrer noopener">designer</a>, artist liaison <a href="https://www.linkedin.com/jobs/view/3447490680/?eBP=JOB_SEARCH_ORGANIC&amp;recommendedFlavor=SCHOOL_RECRUIT&amp;refId=H82HTaAru8y8n15rKjsuXg%3D%3D&amp;trackingId=Cxg6JmAqSSN1PeTlPbPvbQ%3D%3D&amp;trk=flagship3_search_srp_jobs" target="_blank" rel="noreferrer noopener">manager</a>, a product marketing <a href="https://www.linkedin.com/jobs/view/3434317651/?eBP=JOB_SEARCH_ORGANIC&amp;recommendedFlavor=SCHOOL_RECRUIT&amp;refId=Cocra09cvvmIAKoawTdI5Q%3D%3D&amp;trackingId=8n0x5xQvNRm%2FkQ4bKAh1nw%3D%3D&amp;trk=flagship3_search_srp_jobs" target="_blank" rel="noreferrer noopener">manager</a> and tech <a href="https://www.linkedin.com/jobs/view/3406685694/?eBP=JOB_SEARCH_ORGANIC&amp;recommendedFlavor=SCHOOL_RECRUIT&amp;refId=Cocra09cvvmIAKoawTdI5Q%3D%3D&amp;trackingId=c2L%2FfDlkUYt2zd613WK8Hw%3D%3D&amp;trk=flagship3_search_srp_jobs" target="_blank" rel="noreferrer noopener">lead</a>.&nbsp;&nbsp;



Most of the jobs are based in Manchester, United Kingdom, but some mention hybrid working environments.



Last June, eBay <a href="https://blockworks.co/news/ebay-acquires-uk-based-nft-marketplace-knownorigin" target="_blank" rel="noreferrer noopener">acquired</a> UK-based KnownOrigin for an undisclosed amount. Yet NFTs were already sold on the platform. EBay <a href="https://www.ebayinc.com/stories/news/ebay-and-digital-collectibles-our-tech-led-reimagination-continues/" target="_blank" rel="noreferrer noopener">announced</a> in 2021 an expansion into the collectibles category as they “offer greater access to a broader audience of collectors and creators.”



EBay describes KnownOrigin as an “early Web3 pioneer” looking to empower NFT creators who want to to express themselves and maintain livelihoods through their passion.&nbsp;



EBay <a href="https://blockworks.co/news/ebay-nfts-connect-athletes-fans" target="_blank" rel="noreferrer noopener">recently partnered</a> with events platform Notable Live to provide fans with a new way to connect with players.&nbsp;



Both firms have a multi-year contract under which Notable will add exclusive player merchandise, NFTs and other interactive experiences on eBay. It isn’t yet known which blockchain will support Notable Live’s NFTs.



Google searches for Web3 jobs have been steadily rising and companies are still hiring despite a bearish background.&nbsp;



Amazon, one of eBay’s biggest rivals recently put up a job posting for a senior go-to-market <a href="https://www.amazon.jobs/en/jobs/2320871/senior-gtm-specialist-web3" target="_blank" rel="noreferrer noopener">specialist</a>, who would be responsible for growing adoption of Web3 workloads on its cloud computing division. The role requires knowledge of blockchain-based architectures and developer workflow in Layer-1 and 2.&nbsp;



EBay’s KnownOrigin push comes after Blockworks reported that Amazon is soon expected to <a href="https://blockworks.co/news/amazon-nft-marketplace-web3" target="_blank" rel="noreferrer noopener">launch an NFT initative</a>, pegged to inspire customers to play crypto-based games and claim digital collectable rewards.



H/T: CoinDesk



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EBay NFT Job Openings Hint At Web3 Showdown With Amazon

Sebastian Sinclair

They say a rising tide lifts all boats.



That certainly rings true for the altcoin market over the last 30 days, courtesy of strong momentum from leading majors like bitcoin and ether.



Ether’s dominance has inched up ever-so-slightly over 30 days to 17.8% while crypto assets such as <a href="https://blockworks.co/price/sol">solana</a>, <a href="https://blockworks.co/price/doge">dogecoin</a>, <a href="https://blockworks.co/price/xrp">XRP</a> and <a href="https://blockworks.co/price/ada">cardano</a> have seen a small decline of less than 1%.



Total market capitalization is now up 33% from $839 billion to $1.1 trillion since the new year, while the total value locked (TVL) in <a href="https://blockworks.co/category/defi">DeFi</a> has jumped 30% from $50 billion to $65 billion, DeFiLlama <a href="https://defillama.com/" target="_blank" rel="noreferrer noopener">data</a> show.



Of the top 50 altcoins with a market value above $200 million that Blockworks analyzed, <a href="https://blockworks.co/news/aptos-surge-mirrors-ripple-bull-run">aptos</a>, whose reported market cap tops $2.7 billion, remains the sector&#8217;s largest gainer this year.



Up more than <a href="https://blockworks.co/price/apt">350% over 30 days</a>, the protocol previously dubbed as an “<a href="https://blockworks.co/news/aptos-not-out-to-kill">Ethereum Killer</a>” has roughly <a href="https://tokenterminal.com/terminal/projects/aptos" target="_blank" rel="noreferrer noopener">50-60 active developers</a> — similar to non-Ethereum smart contract platforms such as Cosmos, but with far less established dapps and a TVL of <a href="https://defillama.com/chain/Aptos" target="_blank" rel="noreferrer noopener">$61.3 million</a>.



Skepticism from analysts centers around the true value of its <a href="https://blockworks.co/newsletter/issue/30389460">circulating supply</a> and eye-popping fully-diluted valuation just north of $17 billion — which puts it as the sixth most valuable cryptoasset (excluding stablecoins) on an FDV basis.



For the token to justify its market value, a few things need to happen: grow its user base and liquidity, according to a spokesperson at Asia-based crypto services firm First Digital.



“Aptos investor unlocks are not set to begin until [October] this year, I believe, and the extreme negative positioning precipitated a massive short-squeeze. This pushed the price up quickly,” they said.



Still, many other altcoins with a market cap above $200 million have experienced considerable growth year-to-date. Layer-1 protocol Fantom’s native token <a href="https://blockworks.co/price/ftm">FTM</a>, for instance, has almost quadrupled in value — up 180% YTD, while DeFi protocol Injective (<a href="https://www.coingecko.com/en/coins/injective">INJ</a>) closely follows suit at 174%.



And let’s not forget Ethereum rollups <a href="https://blockworks.co/tag/Optimism">Optimism</a> and <a href="https://blockworks.co/tag/Arbitrum">Arbitrum</a> whose transactions now exceed that of the Ethereum mainnet alongside both platforms witnessing an uptick in <a href="https://blockworks.co/news/arbitrum-optimism-exceed-ethereum">daily active users</a>.



<h2>Ether is “world’s best-performing asset”</h2>



But what’s driving the value of the altcoin market, and where are traders expecting prices to go next?



The rally in digital assets has been “broad-based,” with several altcoins — which were oversold in the December bloodbath of liquidations and year-end selling — having bounced back, BitOoda told Blockworks in an email.



When looking at the major bellwether crypto assets, ether is up 34% YTD to bitcoin’s 40% rise.



“This is counterintuitive, as ether has historically acted more as an altcoin and outperformed bitcoin during rallies,” a BitOoda spokesperson said. “One explanation for ETH’s underperformance could be the potential upcoming sell pressure overhang from staking withdrawal unlocks.”



That may be true this year, but when looking over a larger timeframe, the story appears different.



Analysis conducted by Galaxy Digital and <a href="https://www.galaxy.com/research/insights/top-stories-of-the-week-1-27-23/" target="_blank" rel="noreferrer noopener">published</a> last week found ether to be the world’s best-performing asset over a number of timeframes when viewing from a total return and risk-adjusted return lens.



The research took into account the seven, five and three-year returns as well as 2022 performances and a COVID low (March 2020) to present.



“Across every single time frame, except 5 years, ether is the best-performing asset against equity indices, major tech stocks, bonds, commodities and really anything else,” Galaxy said.



That’s despite industry windfalls last year, including several major bankruptcies, contagion woes and ecosystem failures that rocked prices across the board.



According to Australian digital asset trading and custody infrastructure firm Zerocap, altcoins largely act as high-beta assets to ether and their prices have been positively correlated with ether’s performance in recent weeks.



Arbitrum and Optimism have shown growth in on-chain metrics but are less stable in downward trends compared to ether, according to Zerocap analyst Sam Holman.



Their integration into crypto infrastructure is allowing for easier access to new apps on alternative chains, compared to non-EVM chains, due to their rapid growth and addressing the complexity of bridges and lack of liquidity, Holman said.&nbsp;



<blockquote class="wp-block-quote">
“This trend is expected to continue if the market remains strong.”
</blockquote>



A <a href="https://www.jpmorgan.com/solutions/cib/markets/etrading-trends" target="_blank" rel="noreferrer noopener">recent survey</a> of 835 institutional traders conducted by JPMorgan found crypto, commodities and credit are likely to have the biggest increases in electronic trading volumes over the coming year. 



Asked what percentage of their trading volumes would be through e-trading channels, the traders predict crypto will top the list, and have a 2% greater impact on those volumes than commodities.



That’s incongruous considering JPMorgan CEO Jamie Dimon recently called bitcoin a &#8220;<a href="https://twitter.com/SquawkCNBC/status/1616039056961323008" target="_blank" rel="noreferrer noopener">hyped up fraud</a>&#8221; and “pet rock” on CNBC’s Squawk Box during a sideline interview at the World Economic Forum in Davos, Switzerland.



Despite perennial skepticism from the head of the world’s largest multinational bank, the performance of ether and bitcoin continue to drive the entire digital asset market forward.



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Where’s the Non-Bitcoin Market Headed Over Coming Months?

In Australia, crypto startups are preparing for the government’s multi-stage approach to regulating crypto, pitched to protect consumers from what it considers unsustainable business models.



The previous government failed to take the time to future-proof regulatory frameworks, leading to consumer exposure to recent risks, Treasurer Jim Chalmer’s office said in a joint <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/making-crypto-safer-consumers" target="_blank" rel="noreferrer noopener">statement</a> Friday.



“While the industry continues to develop and expand, crypto assets are still commonly associated with speculative trading, posing significant risks,” an accompanying <a href="https://treasury.gov.au/sites/default/files/2023-02/c2023-341659-cp.pdf" target="_blank" rel="noreferrer noopener">consultation paper</a> reads.



Beginning with the first of its three-stage approach, the Australian Securities &amp; Investments Commission, the country’s main financial regulator, will begin bolstering the size of its crypto team.



It will also ramp up efforts to undertake legal action against certain project offerings that fail to register for appropriate credit or financial services licenses while ensuring risks to consumers are clearly disclosed.



Additionally, the Australian Competition and Consumer Commission will scale up its operations to prevent digital asset scams, per the statement. A spokesperson for the Treasury department did not immediately respond to a request for comment.



<h2>Parts two and three: licenses and token mapping</h2>



The previous federal center-right party, the Liberal National Party (LNP), which had retained power in Australia for more than a decade, had made efforts to reinforce existing crypto regulatory frameworks. 



That included a “token mapping exercise” which attempts to define digital assets as it pertains to existing financial law.



The exercise formed part of a recommendation by way of the “Australia as a Technology and Financial Centre Senate select committee” in 2021, spearheaded by Liberal Party Senator Andrew Bragg.



While the LNP had dabbled in crypto regulation, it had prematurely jumped straight to options without first understanding what was being regulated, the new <a href="https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/work-underway-crypto-asset-reforms" target="_blank" rel="noreferrer noopener">Labor government</a> said last year.



As part of its second stage, the government will reform the licensing and custody of crypto assets and establish a set of obligations and operational standards for crypto asset service providers.&nbsp;



It’s particularly interested in the subset of digital assets that currently fall outside the financial services <a href="https://asic.gov.au/regulatory-resources/financial-services/#:~:text=The%20regulatory%20framework%20covers%20a,and%20means%20of%20payment%20facilities." target="_blank" rel="noreferrer noopener">regulatory framework</a>. Consultation on the design of a custody and licensing framework is expected to begin later this year.



In part three of its multi-pronged approach, the Labor government is seeking to establish a framework for reform based on the token mapping exercise in an attempt to discover which assets require additional regulatory attention.



“This will help the government and stakeholders to focus on regulatory gaps and ensure emerging risks are identified and controlled,” per the statement.



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Australia To Tackle Crypto Regulation in Three Stages

MicroStrategy’s net loss jumped quarter over quarter to $250 million — though executives said the firm is going to keep up its longtime strategy of buying and holding bitcoin on its balance sheet.&nbsp;



MicroStrategy’s stock closed the day at $292.13 — down about 14% in the past year, but up 100% from a month ago. The stock was down about 3% in early after-hours trading in New York.



MicroStrategy, co-founded by bitcoin bull Michael Saylor, increased its bitcoin holdings by 2,500 BTC in the fourth quarter to 132,500 BTC, according to the company’s earnings out Thursday. 



“Our corporate strategy and conviction in acquiring, holding and growing our bitcoin position for the long term remains unchanged,” MicroStrategy Chief Financial Officer Andrew Kang said in a statement.&nbsp;



Bitcoin is up about 43% year to date after a brutal 2022 for the asset.&nbsp;



Saylor, who is MicroStrategy’s executive chairman, said Thursday that bitcoin was up 98% from August 2020 — when the company began its bitcoin acquisition strategy — to Feb. 1. The S&amp;P 500 is up 23% over that span, he added.



The executive noted the bankruptcies of companies such as Voyager Digital, Celsius, BlockFi and FTX last year, as well as the collapse of tokens such as UST, LUNA and FTT.&nbsp;&nbsp;



“In our opinion these were all very weak use cases, they were very fragile structures and it was a matter of time before they did melt down,” Saylor said. “The meltdown of that has created short-term negative headwinds for bitcoin…but long-term the rationalization of the crypto market will be beneficial for bitcoin.”&nbsp;&nbsp;



MicroStrategy’s fourth quarter results came after the Virginia-based business intelligence firm reported a net loss of $27 million in the third quarter — a drastic improvement from its <a href="https://blockworks.co/microstrategys-saylor-to-step-down-as-ceo-to-double-down-on-buying-bitcoin">$1.1 billion net loss</a> in the prior three-month period. 



MicroStrategy’s digital asset impairment charges — which comes into play if the market value of bitcoin decreases below its market-adjusted purchase value — were $700,000 during the third quarter, compared to $918 million in the second.&nbsp;



Digital asset impairment charges reached roughly $198 million during the fourth quarter.&nbsp;



MicroStrategy <a href="https://blockworks.co/news/microstrategy-bitcoin-wash-trading-tax-harvesting">sold 704 bitcoins on Dec. 22 for roughly $11.8 million</a>, according to a <a href="https://www.sec.gov/Archives/edgar/data/1050446/000119312522313098/d398241d8k.htm" target="_blank" rel="noreferrer noopener">filing</a> — receiving about $16,700 per bitcoin. Two days later, the company bought 810 BTC for about $16,800 per token.&nbsp;



“MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit,” the filing stated.



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Bitcoin-hungry MicroStrategy Posts $250M Net Loss in Q4

It happened. Bitcoin runs DOOM.



To the delight of crypto Twitter and <a href="https://www.reddit.com/r/CryptoCurrency/comments/10rt887/someone_uploaded_doom_on_bitcoin/" target="_blank" rel="noreferrer noopener">Reddit</a> circles, someone has uploaded a cloned version of the 30-year-old video game classic DOOM to the Bitcoin blockchain as an inscription on the network’s own NFT protocol, Ordinals.&nbsp;



Thanks to a happenstance loophole enabled by Bitcoin’s Taproot upgrade pushed in Nov. 2021, a budget (read: free) version of DOOM has been permanently etched on a <a href="https://ordinals.com/sat/1905393798236699" target="_blank" rel="noreferrer noopener">single satoshi</a> via block 774526, which was added to the blockchain on Wednesday morning.



Being written to Bitcoin means the <a href="https://ordinals.com/inscription/521f8eccffa4c41a3a7728dd012ea5a4a02feed81f41159231251ecf1e5c79dai0" target="_blank" rel="noreferrer noopener">functional game</a> will forever live on the immutable blockchain. As long as the network is online, folks can play this version of DOOM.



Web browsers are still required to compile the code, but forcing unconventional technologies to run DOOM is a meme in tech culture. Crafty hackers have made DOOM <a href="https://www.gamesradar.com/12-things-that-prove-that-doom-will-run-on-literally-anything/" target="_blank" rel="noreferrer noopener">run</a> via pregnancy tests, calculators, ATMs, smart watches, toasters and Pelotons — even “unhackable” crypto <a href="https://thenextweb.com/news/hacker-doom-bitfi-cryptocurrency-wallet" target="_blank" rel="noreferrer noopener">wallets</a>, among other zany conduits.



While the clone is fun in its own blocky-and-basic way, an actual copy of the real DOOM looks destined to make it to the Bitcoin blockchain sometime soon (a Reddit <a href="https://www.reddit.com/r/itrunsdoom/comments/7ue6vd/it_runs_on_the_ethereum_blockchain_doom_at_745/" target="_blank" rel="noreferrer noopener">thread</a> from Feb. 2018 suggests DOOM was once playable on Ethereum, however the linked YouTube video is now unavailable).



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="514" height="590" src="https://cms.blockworks.co/wp-content/uploads/2023/02/bitcoindoom3.gif" alt="" class="wp-image-46304"/><figcaption class="wp-element-caption">DOOM on Bitcoin via a single satoshi</figcaption></figure>



Meanwhile, Ordinals continues to pepper conversation amongst Bitcoiners as the community parses what bringing NFTs to the oldest blockchain really means for the future of network and the NFT ecosystem writ large.



The protocol notably just enabled the <a href="https://blockworks.co/news/inside-bitcoin-biggest-block" target="_blank" rel="noreferrer noopener">biggest-ever Bitcoin block</a> to be mined. A high-definition “Taproot wizard” was inscribed to a satoshi this week, clocking a 3.96MB transaction — close to Bitcoin’s 4MB block size limit (originally 1MB but stretchable via SegWit).



As for the DOOM Ordinal, it was only 31.2 KB big.&nbsp;



Remember: It’s not the size that matters. The ability to run DOOM is far more important.



Updated Feb. 3, 2022 at 3:42 am ET: Added context.



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You Can Now Play DOOM Directly On Bitcoin

Canadian crypto exchange Bitbuy’s upcoming Super Bowl ad has a different vibe than the company’s 2022 spot after an eventful year shook the industry.&nbsp;&nbsp;



Bitbuy is expected to be <a href="https://blockworks.co/news/whos-coughing-up-crypto-winter-dollars-for-super-bowl-ads">among the only crypto firms</a> set to advertise around the NFL championship game on Feb. 12 as companies in the space cut budgets and look to regroup as the crypto winter continues.



Of last year’s crypto advertisers, FTX <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing">went bankrupt</a> and online brokerage eToro told Blockworks it won’t be running an ad. Coinbase last month implemented <a href="https://blockworks.co/news/coinbase-lays-off-950-staff-cuts-operational-costs-by-25">cost-saving measures</a> and exchange OKX, which <a href="https://blockworks.co/news/what-crypto-super-bowl-ads-can-we-expect-in-2023">planned to buy an ad</a>, has changed its mind.



The Bitbuy ad, which <a href="https://www.youtube.com/watch?v=02ivqdVzwS8" target="_blank" rel="noreferrer noopener">went live</a> online Thursday, will be the firm’s second consecutive Super Bowl showing. NBA star Kyle Lowry appeared in <a href="https://www.youtube.com/watch?v=aI3LNq_lres&amp;t=2s" target="_blank" rel="noreferrer noopener">the company’s ad</a> last year featured during the game’s Canadian broadcast. 



Bitbuy’s upcoming 60-second commercial, also to appear only in Canada, is set to run within an hour before the Kansas City Chiefs and Philadelphia Eagles kick off.&nbsp;



Crypto markets plummeted amid the collapse of Terra’s algorithmic stablecoin in May and the subsequent bankruptcies of companies such as <a href="https://blockworks.co/news/3ac-files-for-bankruptcy-as-co-founders-location-unknown" target="_blank" rel="noreferrer noopener">Three Arrows Capital</a>. The industry was once again rattled as FTX crashed in November, shaking confidence in centralized exchanges and similar entities. 



“Whereas the theme for Bitbuy&#8217;s 2022 commercial was missed opportunities, 2023&#8217;s theme is trust,” Binu Koshy, Bitbuy’s branding and communications director, told Blockworks.&nbsp;



“We wanted to remind people in a sort of outlandish way that by being locally based and fully regulated, Bitbuy provides investing services with a personal touch.&#8221;&nbsp;



The new Bitbuy spot features Toronto Raptors forward Scottie Barnes, who Bitbuy <a href="https://www.youtube.com/watch?v=2AjDKl6h_vA" target="_blank" rel="noreferrer noopener">marketed</a> as a brand ambassador Tuesday.



Exchanges typically send a confirmation email to a user who makes a digital transaction. In the upcoming Super Bowl commercial, Barnes gives a Bitbuy user a confirmation hug.&nbsp;



Koshy declined to comment on how much Bitbuy spent on the commercial.&nbsp;The executive previously <a href="https://blockworks.co/news/exchanges-compete-to-grab-super-bowl-spotlight">told Blockworks</a> that roughly 25% of the company’s 2022 marketing budget went to signing Lowry, as well as producing and buying last year’s Super Bowl ad.



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Bitbuy Shifts Super Bowl Ad Focus From ‘Missed Opportunities’ to ‘Trust’

South Carolina Sen. Tim Scott has his eye on a bipartisan regulatory framework for crypto following the crash of FTX and other industry players in 2022.&nbsp;



To serve as ranking member of the US Senate Committee on Banking, Housing and Urban Affairs, Scott is set to work with US Sen. Sherrod Brown, D-Ohio, a crypto critic who chairs the unit. 



Scott, a Republican elected to the Senate in 2013, acknowledged “expansive growth” of the digital assets industry in <a href="https://www.politico.com/f/?id=00000186-0fe2-df27-abcf-8fefd8610000" target="_blank" rel="noreferrer noopener">a Thursday memo</a>, first <a href="https://www.politico.com/newsletters/morning-money/2023/02/02/the-debt-ceiling-is-not-powells-problem-00080804" target="_blank" rel="noreferrer noopener">reported</a> by Politico, adding that an increasing number of consumers are interacting with crypto.



“Several high-profile failures resulted in lost consumer assets, exposed regulatory gaps, and highlighted concerns with illicit finance,” the memo states. “Moving forward, the committee should work to facilitate a bipartisan regulatory framework.”



The senator could not immediately be reached.



Brown, who became chair of the Senate Banking, Housing, and Urban Affairs Committee in February 2021, has historically compared crypto to risky mortgage bonds and over-the-counter derivatives during the lead up to the financial crisis.&nbsp;



After the bankruptcy of crypto exchange FTX in December, Brown <a href="https://www.brown.senate.gov/newsroom/press/release/sherrod-brown-on-ftx-crypto-puts-consumers-and-our-national-security-at-risk" target="_blank" rel="noreferrer noopener">called for</a> a framework “that looks at crypto products for what they are, not what crypto executives want them to be.”



“The things that look and behave like securities, commodities, or banking products need to be regulated and supervised by the responsible agencies who serve consumers,” he added at the time. “Crypto doesn’t get a free pass because it’s bright and shiny. Or because venture capitalists think it might change the world.”



Brown also urged US Treasury Secretary Janet Yellen in <a href="https://www.brown.senate.gov/newsroom/press/release/sherrod-brown-to-treasury-we-need-to-work-together-on-crypto-legislation" target="_blank" rel="noreferrer noopener">a November letter</a> to work on legislation that would create authorities for regulators to supervise crypto players. He noted that single agencies “currently generally do not have a comprehensive view of crypto asset entities’ activities.”



Crypto firms are seemingly anticipating intensified regulatory scrutiny this year, as companies including Binance, Tether, and a16z have <a href="https://blockworks.co/news/mike-pence-nephew-binance-newest-lobbyist">added lobbyists in recent months</a> to boost their presences in Washington, DC.



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Crypto Framework a Priority for Republican Senator Scott

A cryptocurrency linked to a cost of living index is now available to select users on Ethereum scaling solution Arbitrum.



DeFi protocol Nuon announced in a blog post that it would be gradually rolling out its <a href="https://blockworks.co/news/what-are-flatcoins-and-are-they-a-better-inflation-hedge">NUON flatcoin</a> over the course of a month-long trial.&nbsp;



Once operations are confirmed to run smoothly, the cryptocurrency will be available to all users for permissionless minting via added collateral.



The protocol has chosen this “guarded launch” approach to minimize financial risks and repercussions.



“The guarded launch means that the WebApp will be alternating between Open and Closed states so as to better manage and control the launch and protest user’s funds,” the company said in a <a href="https://nuon.fi/blog/launch-release-note-and-faqs/" target="_blank" rel="noreferrer noopener">blog post</a>.



<h2>What is a flatcoin?</h2>



Flatcoins operate similarly to stablecoins, but rather than being pegged to the value of an asset — such as the US dollar or gold — it is pegged to an independent measure of the cost of living and its purchasing power remains “flat.”&nbsp;



The concept of this type of cryptocurrency is not entirely new. It has been discussed by the likes of Brian Armstrong and Vitalik Buterin, who <a href="https://www.youtube.com/watch?v=GUhDXUA4mfQ&amp;ab_channel=Coinbase" target="_blank" rel="noreferrer noopener">noted</a> in a podcast in August last year that “there is value in having some kind of cryptoasset that is intentionally designed to be as stable as possible.”



In the case of Nuon, its flatcoin is designed to hedge against inflation by recalibrating its daily value to account for the rising cost of living, <a href="https://truflation.com/methodology" target="_blank" rel="noreferrer noopener">using</a> the Truflation Index as an <a href="https://www.blockworksresearch.com/glossary#oracles" target="_blank" rel="noreferrer noopener">oracle</a>.



<h2>Stability and design&nbsp;</h2>



Nuon maintained its peg through what the team calls a “triple redundancy mechanism” where the protocol incentivizes users to “mint or burn NUON.”



If the price goes above the peg, the liquidation ratio drops, creating an incentive for users to mint more and sell the token. On the other hand, when the price of the token dips, the liquidation ratio increases, urging users to increase collateral or burn NUON to maintain safe collateral.



That means minters will have to have a reason to risk their collateral and watch the liquidation ratio closely.



Nuon CEO Stefan Rust acknowledges the risk but remains optimistic.



“Our vision for Nuon — inflation-proof money — is ambitious to say the least,” Rust said.



The mechanics differ from the failed <a href="https://blockworks.co/tag/terra">Terra USD</a> design in that NUON is only minted from collateral. In theory, that should put a buffer for the arbitrage mechanism to keep the peg.



Just as decentralized protocols are the answer to risks posed by centralized currencies, and over-collateralization is the answer to maintaining value in the face of market instability, inflation-proof flatcoins are the solution to preserving value over time.”



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‘Flatcoin’ Targets Inflation With Collateral-backed Arbitrum Stablecoin

What’s an institutional allocator to do in a crypto winter like this?&nbsp;



Pay attention to the online footprints of the traders vying for the players with abundant dry powder still in the wings. Keep dialing up references. Call them again. And then call them again.



In sum: due diligence checks that run the gamut from crypto natives to Wall Street types with a vested interest, according to Joe Marenda, a partner at Cambridge Associates.&nbsp;



Marenda, for going on a year now, has held the title of global head of crypto investing for the Boston-based Cambridge, which specializes in devising customizable portfolio blends for the likes of pensions and endowments. He’s been drawing on his deep experience in vetting traditional asset management strategies to do due diligence on digital asset portfolio managers. And he has a suggestion or two along those lines.



Marenda spoke to Blockworks <a href="https://blockworks.co/news/regulators-speeding-up-crypto-timeline">at the iConnections Global Alts conference</a> in Miami this week, dishing out his thoughts on where we are in the cycle, how we got here and where we are going.



<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">&quot;Managers that are trying to raise now, wait until third quarter.&quot; &#8211; Joe Marenda<a href="https://twitter.com/michael_bodley?ref_src=twsrc%5Etfw">@Michael_Bodley</a> moderated the &#39;Fundraising Outlook for 2023&#39; panel today, joined by Zoe Cruz, <a href="https://twitter.com/SteveKurz?ref_src=twsrc%5Etfw">@SteveKurz</a>, Joe Marenda and Katherine Molnar.<a href="https://twitter.com/Blockworks_?ref_src=twsrc%5Etfw">@Blockworks_</a> <a href="https://twitter.com/galaxyhq?ref_src=twsrc%5Etfw">@galaxyhq</a> <a href="https://t.co/Fdw2I6jIwk">pic.twitter.com/Fdw2I6jIwk</a>&mdash; iConnections (@iconnections_io) <a href="https://twitter.com/iconnections_io/status/1620496398327382016?ref_src=twsrc%5Etfw">January 31, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The gist: The bottom may well be in. “Crypto is still very much emerging, with very few exceptions,” valuations are returning to something approaching normal, and volatility at the moment should <a href="https://www.institutionalinvestor.com/article/b1yhfhknybjnrg/Crypto-Hedge-Funds-Deliver-Bitcoin-Like-Returns-Without-the-Volatility" target="_blank" rel="noreferrer noopener">surprise</a> no one.



Picking up the phone and knocking on doors and doing the (due diligence) work is perhaps now <a href="https://blockworks.co/news/what-do-crypto-traders-tell-their-lps">more important in the industry than ever</a>, the San Francisco-based Marenda said. Managers may want to err on the side of patience for the foreseeable as those rigorous processes play out.&nbsp;



Read More: <a href="https://blockworks.co/news/what-do-crypto-traders-tell-their-lps">How “radio silence” from crypto traders drove LPs “all but mad” in Q4</a>



Here’s how he’s going about it. Marenda declined to comment on specific funds or clients, and expressed his personal opinion throughout.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: Cambridge has been around for decades. Crypto has not. You all have due diligence on traditional strategies down, right? What’s different?



Marenda: There’s a lot more reference checks, to start…What the entrepreneurs in the space think of [venture capitalists] is crucial. And it’s their reputation that gets them deal flow — one of the fascinating things about crypto entrepreneurs is they have no filters. So, when you actually interview them, they’re very blunt and honest about <a href="https://blockworks.co/news/crypto-due-diligence-startup-vying-to-bring-transparency-to-opaque-industry">how they evaluate what they think</a> of this VC versus that VC.



They’ll just tell you if somebody promised something to get on the cap table, and they didn’t deliver, they will throw them under the bus.



Blockworks: Which you would almost never see in TradFi.



Marenda: Exactly…that has been wonderful. That tells you more about a fund than anything else. And the fact that they will talk about other funds when you’re like, “I’ll call them about Fund X. And then they start talking about Fund Y, Z, ABC.”&nbsp;



It’s incredibly useful, because the reputation of the fund ultimately is what drives the deal flow. That’s very different from traditional finance.



Blockworks: What else is different?



Marenda: The other aspect I think that’s really different is the fact that this is such a [broadly] social-dominated industry. There’s a lot more information out there that you have, that you can call on — and it’s not just crypto Twitter. It’s Reddit…It’s Substack and everything.&nbsp;



Because there, you can build an entire history of their thought processes on investing. And if they tell a different story now [compared to earlier in Cambridge’s due diligence process]…I see there’s a difference between what you say now and what you said before, so that’s a big deal.&nbsp;



The other one is something that I’ve been asking about recently, looking at their true social posts to see what kind of lifestyle they’re living.



Blockworks: The lambo lifestyle? A little less buttoned-up lifestyle?&nbsp;



Marenda: I’ve been thinking about whether they’re actually more interested in investing or in the lifestyle than investing, you know. [Crypto] allows them to do that, and I want people that just love investing, and, if they walk everywhere, that’s probably something that’s pretty exciting.&nbsp;



As long as they’re looking both ways when they cross the street.&nbsp;



This interview was edited for brevity and clarity.



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Inside Crypto LP Big Leagues: ‘A Lot More Reference Checks’

Matthew Fiebach

SUSHI

Sushi Governance Update

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

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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;