Compound is a lending platform built on Ethereum that enables users to permissionlessly borrow or lend from a pool of assets. Rather than interest rates being set by individuals, they are determined algorithmically based on the proportion of assets lent out.

Compound

Casey Wagner

Sebastian Sinclair

The SEC served Coinbase with a Wells notice Wednesday over concerns about alleged securities violations, according to a filing.&nbsp;



The Wells notice, which precedes an enforcement action, states that the <a href="https://blockworks.co/tag/sec">SEC</a> will be targeting Coinbase’s spot market, staking service, Coinbase Prime and Coinbase Wallet. The agency moves forward with a Wells notice after it has determined laws have been violated through an investigation.&nbsp;



The exchange in response on Wednesday <a href="https://www.coinbase.com/blog/we-asked-the-sec-for-reasonable-crypto-rules-for-americans-we-got-legal">said</a> it has “produced documents and provided two witnesses for testimony, one on the basic aspects of our staking services and one on the basic operation of our trading platform.”&nbsp;



The SEC declined to comment, and Coinbase pointed to its public statements and declined to comment further.



“We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets,” <a href="https://blockworks.co/tag/coinbase">Coinbase</a> said in its response statement on Wednesday.&nbsp;&nbsp;



The exchange said it’s “confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for.”



The SEC “simply has not been fair or reasonable when it comes to its engagement on digital assets,” according to the exchange, which added that the company “provided multiple proposals to the SEC about registration over the course of months, all of which the SEC ultimately refused to respond to.”



The Wells notice, Coinbase said, relates to an “unspecified portion” of its listed digital assets, which the company says are not securities. Even so, exchange representatives said there’s still no clear “regulatory path” toward industry compliance with the “current U.S. crypto regulatory confusion.”



“We spent millions of dollars on legal support to build these proposals and repeatedly asked for the SEC’s feedback,” Coinbase said. “We got none.”



Coinbase has met with the SEC on numerous occasions, claiming to have interacted 30 times in more than nine months — without much to show for it, in the exchange’s estimation.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This is a perfect ex: &#8211; CB has 30+ meetings with SEC &#8211; Spends millions drafting a registration proposal despite that literally being the SEC&#39;s job &#8211; Gets ghosted by SEC for 9+ mo &#8211; Promised meeting for clarity with SEC cancelled on 1 day notice &#8211; CB sued for being a bad actor??? <a href="https://t.co/IsNFvmp4tK">pic.twitter.com/IsNFvmp4tK</a>&mdash; Collins Belton (@collins_belton) <a href="https://twitter.com/collins_belton/status/1638662815886999552?ref_src=twsrc%5Etfw">March 22, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Regulatory uncertainty in the crypto industry is getting worse,” Coinbase said. “Instead of developing a regulatory framework for crypto, the SEC is continuing to regulate by enforcement only.”



The publicly traded US company said potential enforcements could incur injunctive relief, disgorgement and civil penalties, per the filing.&nbsp;



The notice marks the SEC’s second regulatory action against the crypto industry on Thursday. Earlier in the afternoon, the agency <a href="https://blockworks.co/news/sec-sues-justin-sun">charged Tron network’s Justin Sun</a> with alleged securities violations.



Updated March 22, 2023 at 7:15 PM ET: Additional context and quotes throughout.



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SEC Serves Coinbase in Latest Alleged Crypto Securities Violation

Ben Strack

Notional open interest on the largest centralized crypto derivatives exchange hit a record high Wednesday, with demand for bitcoin options leading the way amid a turbulent time for the traditional finance industry.



Deribit’s notional open interest on the platform exceeded $20 billion Wednesday, according to the company. Most of that was attributed to $11.7 billion from bitcoin options — also an all-time high — and $6.9 billion from ether options.&nbsp;



The record comes after <a href="https://blockworks.co/news/silvergate-collapse-not-crypto-problem">the fall of Silvergate Bank</a>, <a href="https://blockworks.co/news/silicon-valley-bank-meltdown-has-little-to-do-with-crypto">Silicon Valley Bank</a> and <a href="https://blockworks.co/news/signature-possession-nothing-to-do-with-crypto">Signature Bank</a> in recent weeks, which some said has shaken trust in financial institutions.&nbsp;



“The first cause of it all could be that BTC is finally acting as a hedge for the traditional financial and especially banking system,” said Luuk Strijers, Deribit’s chief commercial officer. “Bitcoin has failed to meet expectations as an inflation hedge in the past but is finally acting as it was intended to do, triggering an elevated level of interest.”



Derivatives exchange CME Group has also seen consistent volume and open interest growth in its crypto futures and options products.&nbsp;



Its average daily bitcoin options open interest in 2023 is up an all-time record of 140% — a notional value of $936 million, a company spokesperson told Blockworks. CME bitcoin options hit record daily open interest on Tuesday, reaching a value of $1.55 billion.



A potential end to rate hikes could also be causing more interest in all risk assets, including bitcoin, Strijers told Blockworks. The <a href="https://blockworks.co/news/federal-reserve-interest-rate-25-bps-march">Federal Reserve raised interest rates by 25 basis points</a> Wednesday, continuing a trend of slower-paced increases after previous bumps of 0.5% and 0.75%.



Luke Hoersten, founder and CEO of bitcoin derivatives exchange Bitnomial, argued bitcoin has emerged as a safe store of value as people realize putting their money into US Treasury-backed cash deposits can be risky. Traders are moving money into bitcoin, he added, and using futures and options to protect themselves from price changes.&nbsp;&nbsp;



“Some traders are worried about synthetic cash-settled exposure because it can debase or de-peg as the environment becomes uncertain and more volatile,” Hoersten said. “Physically settled futures and options are a better choice because they give people native exposure to both cryptocurrency and fiat currency.”



CK Zheng, co-founder and chief investment officer of crypto hedge fund ZX Squared Capital, said he believes bitcoin is “starting a new cycle” after reaching a bottom following the bankruptcy of crypto exchange FTX last November.&nbsp;



He agreed the current banking crisis further validates bitcoin’s thesis as a digital gold of sorts against government money printing, and offered other reasons for the increased open interest in crypto derivatives.&nbsp;&nbsp;



“There are not many natural sellers, like crypto miners, who need to get rid of BTC, [and] the leverage in the crypto industry is no longer a great threat to this ecosystem,” Zheng explained. “The next BTC halving is coming early next year, which is very bullish given the design of the halving process.”



The halving refers to the bitcoin mining reward being reduced from 6.25 <a href="https://blockworks.co/tag/btc" target="_blank" rel="noreferrer noopener">BTC</a> per block to 3.125, <a href="https://blockworks.co/news/bitcoin-halving-a-year-out">anticipated to take place in April 2024</a>.



No matter the exact cause of the Deribit notional open interest record high, Strijers said, increased volatility implies investor interest in instruments that enable them to benefit from protecting themselves from the consequences.



“For us, this implies higher option volumes, an increase in the number of contracts outstanding, and more call buying to position for possible upside,” he said. “Now that the price has increased, we are also seeing some more put activity demonstrating clients&#8217; interest in potentially hedging downward risk,” he said.&nbsp;



The majority of Deribit’s bitcoin options contracts are for the strike price of $30,000. The strike price of an option is the level at which an investor can buy the underlying security in the case of a call, or sell it in the case of a put, before the contract expires.&nbsp;



Bitcoin’s price was roughly $28,100 at 3:00 pm ET — up 13.1% from seven days ago.&nbsp;



“$30,000 is the next resistance level,” Zheng said. “If BTC breaks this level convincingly, it will be very bullish for the near term.”



Updated March 22, 2023 at 5:05 pm ET: Added information about CME Group&#8217;s bitcoin options open interest.



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Deribit Bitcoin Options Open Interest Hits All-time High

The SEC is going after the Tron network’s founder for allegedly selling unregistered securities in the latest action taken by US regulators against crypto industry players.



<a href="https://blockworks.co/tag/justin-sun" target="_blank" rel="noreferrer noopener">Justin Sun</a> orchestrated the “unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities,” according to an SEC <a href="https://www.sec.gov/news/press-release/2023-59" target="_blank" rel="noreferrer noopener">press release</a> and legal documents filed Wednesday in the US District Court for the Southern District of New York.



The SEC’s probe extended beyond Sun, however, considering the regulator said it reached a settlement with eight celebrities, ranging from Lindsay Lohan to “Soulja Boy,” for allegedly promoting the tokens in question. 



Sun founded the Tron network in 2017. The network launched its mainnet the following year and became a <a href="https://blockworks.co/tag/daos" target="_blank" rel="noreferrer noopener">DAO</a> in 2021.



The SEC alleges that starting in about August 2017, Sun distributed billions of <a href="https://blockworks.co/price/trx" target="_blank" rel="noreferrer noopener">TRX</a> and <a href="https://blockworks.co/price/btt" target="_blank" rel="noreferrer noopener">BTT</a> tokens to the public while creating secondary markets on which these assets could be traded.&nbsp;



Because Sun sold these as securities, the commission alleges, he was obligated to register these sales with the SEC, but never did.&nbsp;&nbsp;



The agency is also accusing Sun of “fraudulently manipulating the secondary market for TRX through extensive wash trading,” according to the press release. He allegedly accomplished this through the Tron network, as well as the BitTorrent Foundation, which owned accounts used in the trading, and Rainberry — whose employees transferred funds to facilitate the trading, the lawsuit claims.



The <a href="https://blockworks.co/tag/tron" target="_blank" rel="noreferrer noopener">Tron</a> network did not immediately comment on the charges. Sun did not immediately return multiple requests for comment.



“While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement. “As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities.”



An SEC spokesperson did not immediately return a request for further comment.&nbsp;



Including Soulja Boy (DeAndre Cortez Way) and Lindsay Lohan, a total of eight celebrities have found themselves in the crosshairs of regulators. The SEC additionally charged the following for allegedly illegally promoting TRX and/or BTT without disclosing a paid partnership: Jake Paul, Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon).



Each of the above individuals, with the exceptions of Cortez Way and Mahone, has settled with the SEC for $400,000, the agency said.&nbsp;



It’s <a href="https://blockworks.co/news/ripple-counsel-crypto-usa">not the first time the SEC has targeted a crypto company</a> for issuing a token it deems a security. Ripple has been battling with the agency in court for more than two years over its XRP token, which the vast majority of exchanges delisted when the lawsuit began in 2020.&nbsp;



Sun’s charges may be settled before going to trial.&nbsp;



Updated March 22, 2023 at 7:26 PM ET: Additional context and quotes throughout.



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SEC Sues Tron Network Founder for Allegedly Selling Securities

Michael Bodley

With US single-family home values hovering in a middle-of-the-road range on a year-over-year basis, crypto companies are looking to carve out a slice of the US real estate pie — even as digital assets themselves remain deeply depressed over that same period.



In the latest instance, fintech and single family-focused sales company Roofstock has sold off a Georgia home to RealT via a tokenized Ethereum-based NFT, representatives for both companies told Blockworks on Tuesday. It marked the first collaboration between the two companies. 



The first round of the transaction was <a href="https://opensea.io/assets/ethereum/0xf928d6285b8a4f9ac5a640ae598d7399c331cea7/1" target="_blank" rel="noreferrer noopener">facilitated</a> by OpenSea, with RealT imposing “heavy restrictions” around the float of the initial fractionalization offering, according to Remy Jacobson, the co-founder at RealT and one of two chief executives at the businesses. A second round will follow later.



It’s not the first such instance of an NFT-enabled property sale for Roofstock, which has a Web3-focused division that aims to make inroads into the property sector.&nbsp;&nbsp;



The process is similar to <a href="https://blockworks.co/news/roofstock-sells-property-via-nft">Roofstock’s previous tokenized real estate sale</a> of a home in Alabama last month.&nbsp;



“RealT acquires properties sourced by Roofstock into C-Corps which then sell tokenized shares to investors,” the spokesperson said in an additional statement. The idea is to use the tokenized equities originated in the US to provide blockchain-based exposure to investors in other countries.&nbsp;



A spokesperson disclosed metrics behind the fractionalization of the NFT by RealT:&nbsp;



<ul>
<li>670 unique token holders snapped up a total of 722 orders</li>



<li>The blockchain transaction process took two minutes and 46 seconds&nbsp;</li>



<li>The average ether (ETH)-based purchase equated to about $298.</li>
</ul>



The partnership relies upon creating a separate Wyoming LLC tied to each single-family asset the company has available for sale in its inventory, which acts as a shell for a corresponding wallet holding the buyer’s NFT on Ethereum “that has [its] token ID associated with the smart contract,” said Sanjay Raghavan, vice president of Web3 initiatives at Roofstock.&nbsp;&nbsp;&nbsp;



“The property in question can then be bought and sold on various NFT marketplaces, resulting in instantaneous sale and settlement,” the statement said.



Each buyer holds a “soulbound” NFT, according to Raghavan, a non-transferrable token, meaning that the underlying blockchain mechanics are permissioned in nature.



Each property NFT, as a result, “gets marked with a KYC flag,” Raghavan said, and the prospective owner “can go to OpenSea or any other marketplace where the asset is listed and purchase the NFT.”&nbsp;



Ether collected through RealT’s tokenization offering this week partially divides ownership of the property acquired for 218,000 USDC on OpenSea.



The process facilitating the sale of the Atlanta-area home — which has two bedrooms, 2.5 bathrooms and a total of 1,524 square-feet — is being billed as the beginning of a partnership between the two companies, which is kicking off at a time when US regulators are keeping a close eye on crypto. And when murmurs of a real estate bubble waiting to burst have been percolating.&nbsp;



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1022" height="680" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png" alt="" class="wp-image-49841" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=1022 1022w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-7.png?w=80 80w" sizes="(max-width: 1022px) 100vw, 1022px" /></figure>



Both executives said they’re putting in place measures to ensure compliance with the relevant US authorities as the outlook for digital asset oversight remains largely mixed.&nbsp;&nbsp;



“Blackrock is saying tokenization is the future, and you can be sure the SEC is listening,” Jacobson said.



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Atlanta Home Tokenized on Ethereum, Nets $214,882 in Under 3 Minutes

Max Thake

Let’s set the scene: The year is 2030, and the Internet of Things has become ubiquitous. Sensors are everywhere, everything’s outfitted with a chip, and you’ve already interacted with twenty IoT service providers before you brushed your teeth this morning without even knowing.&nbsp;



After your morning cup of coffee, dutifully prepared for you by the smart machine that knows your taste better than you do (it also knows your daily routines and may or may not be selling this info), you head for the hairdressers. Via an app, you find and unlock the nearest shared electric vehicle and hit the road as it happily sells off more of your data to Big Tech.



An hour later, as stylish as ever, you head back for the vehicle — only to find that it rejects all of your attempts to get in. You try to hop on the bus, using your phone to pay, but the transaction doesn’t go through. Even a nearby vending machine refuses to sell you your now much-needed emotional support chocolate bar.



<h2>The pieces moving today</h2>



All of the things that you tried to do during your hypothetical day in 2030 relied on transactions involving devices. These devices were leveraging central bank digital currencies (CBDCs), controlled by that self-same central bank. And your friendly central bank was only happy to help when the local authorities, upset by your involvement in some recent protests, wanted to teach you a lesson. The rest is history.



The above scenario may feel far-fetched,&nbsp;but my humorous hyperbole reflects the worst possible future scenario imagined by CBDC critics. The number of connected devices is <a href="https://www.statista.com/statistics/1183457/iot-connected-devices-worldwide/">growing fast</a>, both in business inventories and on the consumer market. The rise of artificial intelligence — yes, that includes ChatGPT, which Twitter can’t get enough of these days — and the way the technology enables connected devices to be <a href="https://www.infoworld.com/article/3663017/how-ai-is-changing-iot.html">more efficient</a> means that more processes will be automated. And this doesn’t just go for things like smart factories: Amazon’s <a href="https://www.theguardian.com/us-news/2020/feb/25/amazon-go-grocery-supermarket-seattle-technology">autonomous shop</a> and the fully-automated <a href="https://metro.co.uk/2022/12/26/mcdonalds-opens-first-restaurant-thats-not-fully-run-by-humans-17996648/">McDonald’s in Texas</a> are both harbingers of just how much automation we will be dealing with daily. And it’s worth noting that my scare tactic of a morning routine is already more or less approaching the status quo in <a href="https://worldcrunch.com/culture-society/china-surveillance-cameras">China</a>.



The fact of the matter is, we are relying on connected devices in more daily activities. It’s not the problem, really; the real problem is the digital infrastructure that the apps — and thereby the increasingly intelligent vehicles, machines, and robots — run on. That’s why the paradigm of machine and human economic relations we are fast heading into needs to run on Web3 rails, with everyone in charge of their own data and assets. The machines are not the enemy, but our legacy methods of running them are.



The interactions between all of these internet-connected devices and the wide world out there include a transactional component. Sometimes it’s about <a href="https://www.consumerreports.org/privacy/connected-devices-share-more-data-than-needed-study-says-a7015033345/">selling your data</a>, and sometimes, it’s more direct, like when you’re using your phone to pay at the grocery store (which is becoming <a href="https://fintechmagazine.com/digital-payments/75-of-consumers-now-using-mobile-wallets-survey">ubiquitous</a>). In today’s world, most of these transactions involve a traditional banking account at a certain point, either the user’s own or an omnibus held by a specific platform for its business needs. In the future, though, these accounts could instead be virtual wallets with CBDCs, digital tokens issued and managed by central banks.



And as wonderful as that might sound, CBDCs and their inherently centralized design enable the issuer to directly control your spending behavior. Digital currencies are programmable, malleable, which makes any sort of control possible. You can set limits on how much a person can keep in their account in order to stimulate economic activity by forcing purchases and investment. You can limit their ability to purchase non-eco-friendly goods, or build carbon offsets into transactions. Oh, and only one plane flight per year. For some, all of this may still sound appealing, but this slope is oh so slippery. Why not just ban everyone you don’t like from buying food?&nbsp;&nbsp;&nbsp;



Recent years already saw cases where governments sought to hamper citizens’ ability to transact as a punitive measure, like China’s <a href="https://www.businessinsider.com/china-social-credit-system-punishments-and-rewards-explained-2018-4">social credit system</a>, for example, or Canada’s <a href="https://www.marketwatch.com/story/canadian-banks-restrict-funds-to-trucker-protest-groups-11645115277">action</a> against trucker protests. You may feel differently about the people involved, but the mechanisms at play are similar in their logic. We enact our financial freedom by choosing what we purchase and from whom. If this freedom depends on the goodwill of a third party, it’s no freedom at all, and being excluded from the real-world economy is a direct threat to one’s livelihood.&nbsp;



Take these trends, put them together, let them simmer for a bit, and there we are — that doomsday scenario is looking way more realistic. You may have heard about the <a href="https://www.thesocialdilemma.com/">Social Dilemma</a>, where tech experts from Silicon Valley sounded the alarm in an hour-and-a-half long informative yet dystopian documentary about the dangerous impact of social networking’s manipulative underbelly, “brought to you by Big Tech.” We’re next heading towards what you may call “the connected dilemma,” where we either leverage the Internet of Things at the cost of giving away even more intimate data about even more aspects of our lives, or keep some slither of privacy but remain in the Stone Age, comparatively speaking.&nbsp;



But IoT apps don’t have to be built on centralized Big Tech — they can be built on Web3 instead. IoT-specific decentralized applications (dapps) enable any user, whether human or machine, to securely interact and transact with others in a peer-to-peer manner. They can do so with full sovereignty and ownership over their identities and their data, meaning user surveillance becomes a thing of the past. On an even better note, if the currencies we choose to use are built on decentralized tech, the potential for monetary censorship then stays in the past too. And so, this leaves us with a choice, not a dilemma. It’s no longer a case of ‘choose privacy, but live in the Stone Age, or ‘choose the latest tech but give up your most intimate data.’ It’s a case of choosing to build and use apps which run on decentralized foundations. On Web3, not Big Tech. If we get that right, we can have our cake and eat it too.&nbsp;



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


<div class="wp-block-post-author-biography">Max Thake is an entrepreneur, writer, and co-founder of peaq, a blockchain network powering the Economy of Things, and EoT Labs, a software development and incubation organization supporting open-source projects focused on the Economy of Things. peaq empowers people to manage and earn from vehicles and devices as they provide goods and services to people and other machines. Max has built multiple organizations, teams and brands during his years in the blockchain space. He operates at the intersection between the humanities and sciences and enjoys explaining technological complexity in simple terms and using it to solve problems.</div>


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For the Internet of Things, It’s Either Web3 or 1984

Bessie Liu

The Arbitrum ARB governance token airdrop is one day away and will mark the beginning of its transition into decentralization.



Prior to its token launch, the Ethereum layer-2 network had been governed by New York startup <a href="https://blockworks.co/tag/offchain-labs" target="_blank" rel="noreferrer noopener">Offchain Labs</a> — the developer behind the protocol. 



Arbitrum is an <a href="https://ethereum.org/en/developers/docs/scaling/optimistic-rollups/" target="_blank" rel="noreferrer noopener">optimistic</a> rollup scaling solution on Ethereum. Scaling solutions are designed to ease congestion and prices of gas fees on the Ethereum network.



Rather than executing a transaction on Ethereum, the transaction is instead sent to Arbitrum, whose throughput capacity is seven to <a href="https://blockworks.co/news/arbitrum-optimism-exceed-ethereum">10 times greater than that of Ethereum</a>.&nbsp;



Following Arbitrum’s <a href="https://blockworks.co/news/arbitrum-upgrades-to-nitro-ahead-of-ethereum-merge">Nitro upgrade</a>, there has been an <a href="https://dune.com/blockworks_research/l2-comparison-dashboard" target="_blank" rel="noreferrer noopener">uptick</a> in transactions on-chain, recently <a href="https://dune.com/queries/1873519/3083010" target="_blank" rel="noreferrer noopener">overtaking Ethereum</a> in daily transactions.



There’s currently $2 billion locked inside Arbitrum-powered protocols compared to Optimism’s $1 billion, per <a href="https://defillama.com/chain/Arbitrum" target="_blank" rel="noreferrer noopener">DeFiLlama</a>. Decentralized derivatives platform GMX and exchange Uniswap command the most value. Ethereum native dapps Aave and Curve have also launched on the network, among others. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1600" height="760" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1024&amp;h=1024" alt="" class="wp-image-49814" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/unnamed-1.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



Rising usage only amplifies the need for decentralization. According to <a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">Blockworks Research</a>, ARB will allow for decentralized governance over the Arbitrum protocol, similar to Optimism’s OP token. 



ARB holders will vote on all aspects of the protocol including upgrades, inflation adjustments, as well as capital allocations (including grants).&nbsp;



Almost 12% of the total airdrop supply will be distributed to Arbitrum users and a tad over 1% of will be given to <a href="https://docs.google.com/spreadsheets/d/e/2PACX-1vSSAzkIIJqw4WGKCF9gXFUkQojTt6weQTExZYmp3YRIR2TUjir9N8nh8xg7gQ2wuPA8mJKL2neL--to/pubhtml#" target="_blank" rel="noreferrer noopener">DAOs</a> building on top of the network.



<ul>
<li>43% to the Arbitrum DAO treasury overseen by the protocol’s community governance.&nbsp;</li>



<li>27% to the Offchain Labs team and future advisers.</li>



<li>17.5% to Offchain Labs investors.</li>
</ul>



A security council will also be established to make swift decisions when a normal governance process may be too slow.&nbsp;



“The security council, while removing some element of decentralization, is meant as a backstop in case of emergencies,” Blockworks Research said. “Since Arbitrum, and rollups in general, are still in their infancy it&#8217;s not enough to say they are truly 100% secure especially as new upgrades get added.”



Token holders will elect two groups of six security council members (totaling 12) every six months, each who will have private keys to a multsig that will control the protocol’s primary smart contract.



An eligible candidate for the council must be a member of the DAO and receive support from 0.2% of votable tokens. Chosen members will receive a $5,000 stipend in the form of ARB tokens.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1600" height="819" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1024&amp;h=1024" alt="" class="wp-image-49810" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-6.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



<h2>How much trust is baked into Arbitrum?</h2>



Main trust <a href="https://l2beat.com/scaling/projects/arbitrum" target="_blank" rel="noreferrer noopener">concerns</a> around Arbitrum are in its state validation and upgradability. Arbitrum did not respond to Blockworks’ request for comment.



State validation refers to the proofs used or how the network decides which transactions (network state) are valid.



“In Arbitrum&#8217;s case, they have fraud proofs enabled, but only by whitelisted validators and used interactive proofs which take many transactions to solve,” Blockworks Research said.



Although enabling fraud proofs is much better than having none at all — as in the case of Arbitrum’s competitor Optimism — it would be more ideal to have permissionless proofs. 



Another risk is the upgradability of Arbiturm’s smart contract, as seen with Jump Crypto’s <a href="https://blockworks.co/news/jump-crypto-wormhole-hack-recovery">counter-exploit of the Wormhole hacker</a> last month. A smart contract is considered to be most secure if it can not be upgraded, which is not the case for both Arbitrum and Optimism.



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Arbitrum Airdrop: What You Need To Know About This Ethereum Layer-2

In a widely anticipated move, the Federal Reserve moved to bump interest rates by a quarter of a percentage point Wednesday, extending a series of what markets hope will be continued slower-paced increases.&nbsp;&nbsp;



The US central bank ongoing geopolitical tensions, persistent, although hopefully plateauing, inflation and a need to reach maximum employment as reasons for a repeat 25 basis point increase.&nbsp;



The move marks the Fed’s ninth <a href="https://blockworks.co/news/cryptos-stocks-rally-on-fourth-straight-0-75-interest-rate-increase">consecutive</a> rate increase, a strategy it hopes will curb the highest inflation the country has seen in more than four decades, but markets fret over whether a soft landing is achievable&nbsp;&nbsp;



“The Committee will closely monitor incoming information and assess the implications for monetary policy,” Federal Open Market Committee (FOMC) members wrote in a statement at the end of their two-day policy meeting Wednesday. 



“The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”&nbsp;



Bitcoin and ether were mixed on the news, with bitcoin gaining more than 1%, extending its banking-crisis fueled run, and ether losing 1.1%.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes rallied slightly after the decision, rising about 0.4% and 0.5%, respectively, likely because markets had predicted the rate increase.



Recent stress in the banking sector has central bankers rethinking policy, Powell said during a press conference Wednesday.&nbsp;



“What I heard was a significant number of people saying that they anticipated there would be…some tightening of credit conditions and that would really have some effects on our policy,” Powell said. 



<blockquote class="wp-block-quote">
“Remember, this [happened] 12 days ago… we&#8217;re trying to assess something that just is so recent, and it&#8217;s very difficult, there&#8217;s so much uncertainty.”
</blockquote>



Fed Chairman Jerome Powell may be feeling better about another rate increase because the KBW Bank Stock Index, which tracks the 24 largest firms in the US, has been relatively stable over the past few days, Noelle Acheson, author of Crypto is Macro Now and former head of market insights at Genesis, said.&nbsp;



“Some are interpreting this as greater reassurance that there won’t be ripple effects, but I disagree — the fact that the index is not going up could hint at a ‘wait and see’ stance, with ripple effects already priced in after the brutal drop so far this month,” Acheson said. 



Another option for the Fed is to leave rates as they are for some time. Powell gave few hints as to his expectations, but he did say that market participants pricing in rate cuts this year are likely wrong, noting that FOMC participants “don’t see rate cuts this year,” and stressing twice in response to questions, “that’s not our expectation.”



As to the probability of a so-called “soft landing” for the economy, Powell said it was too early to say if there’s any change to his assessment. “I do still think, though, that there’s a pathway to that,” he said.



“That pathway still exists, and we’re just trying to find it.”



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Fed Bumps Interest Rates By 25 Basis Points, Markets Jump 

Shalini Nagarajan

Bankrupt cryptocurrency lender Celsius has received formal approval to let custody account holders receive more than 72% of their holdings.



US bankruptcy judge Martin Glenn granted a settlement agreement stating custody account holders will have to sign an opt-in form to receive the settlement payment, a <a href="https://cases.stretto.com/public/x191/11749/PLEADINGS/1174903212380000000219.pdf" target="_blank" rel="noreferrer noopener">filing</a>, released Tuesday, showed. 



They can claim up to 72.5% of their assets “free and clear,” which will be divided into two settlements of 36.25% each. The first settlement should be paid out by June 11, while the second should be made by Dec. 31 this year. The opt-in form must be signed by April 24 at 5:00 pm ET.



<a href="https://blockworks.co/tag/celsius" target="_blank" rel="noreferrer noopener">Celsius</a>, the committee of unsecured creditors and the custody ad hoc group were parties to the agreement. 



The entry of the settlement approval order includes a requirement that settling custody account holders won’t pursue litigation, “including seeking relief from the automatic stay, turnover, or their claims or causes of action.”



Holders of custody accounts held assets that “were never in the Earn program or Borrow Program and were transferred directly into the Custody Program,” Celsius has <a href="https://celsiusnetwork.medium.com/custody-account-withdrawal-faq-1c714e4979ae" target="_blank" rel="noreferrer noopener">said</a>.



Present or former employees, as well as insiders, are not allowed to partake in the settlement agreement, according to the filing. The meaning of the term “insider” derives from the description under <a href="https://www.law.cornell.edu/definitions/uscode.php?width=840&amp;height=800&amp;iframe=true&amp;def_id=11-USC-1957244918-71777986&amp;term_occur=20&amp;term_src=" target="_blank" rel="noreferrer noopener">Section 101(31)</a> of the US bankruptcy code.



Glenn <a href="https://blockworks.co/news/celsius-bankruptcy-return-50m">ordered the return of crypto worth $50 million to Celsius customers</a> in December. “I want this case to move forward,” he reportedly said, adding that he wanted creditors to recover “as much as they possibly can as soon as they possibly can.”



Last month, <a href="https://blockworks.co/news/celsius-selects-novawulf-to-help-felled-lender-navigate-bankruptcy">Celsius chose NovaWulf</a> Digital Management — after screening more than 130 bids — to help close out its restructuring scheme. Celsius estimates that more than 85% of its customers will be able to recover 70% of their claims in liquid crypto under the NovaWulf deal.



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Celsius To Return 72% of Crypto to Custody Account Holders

David Canellis

On the romance front, SynFutures’ new NFT trading app, NFTures, probably can’t help. But its interface is no doubt familiar to anyone who’s been unlucky enough to use dating apps like Tinder and Hinge.



Swipe left to short the CryptoPunk. Swipe right to go long — with up to three times leverage either way.&nbsp;



It’s a hilariously degenerate way to think about NFTs. But it moves to reinforce personal taste at a time when NFT marketplaces are catering to high-volume traders.



Instead of gamifying speculation with impersonal aggregators, low fees and zero royalties, NFTures places the actual imagery tied to NFTs front and center.&nbsp;



Just like how potential dates instantly determine date-ability with one glance at a profile picture, traders can immediately wager whether a blue-chip profile picture NFT is overvalued or undervalued, with all bets collateralized and settled in ether (ETH), all on-chain via browser wallet MetaMask, among others.



<a href="https://www.nftures.com/" target="_blank" rel="noreferrer noopener">NFTures</a> (a portmanteau of “NFT” and “futures”) is currently in alpha, and went live this morning for a portion of SynFutures’ waiting list. The list has so far garnered around 14,000 signups, chief marketing officer Mark Lee told Blockworks, with a few thousand now able to start swiping.



Users won’t be longing or shorting fully-fledged NFTs, which in the case of Bored Apes and CryptoPunks cost upwards of 58 ETH ($100,000). NFTures instead offers exposure to a basket of floor price CryptoPunks via a SushiSwap price oracle.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img decoding="async" loading="lazy" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=1024&amp;h=1024" alt="nftures nft trading app" class="wp-image-49776" width="257" height="370" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=950 950w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=208 208w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=711 711w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=178 178w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=181 181w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=152 152w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/nftures.jpg?w=56 56w" sizes="(max-width: 257px) 100vw, 257px" /><figcaption class="wp-element-caption">Are you into this CryptoPunk? Click the heart to go long | Source: SynFutures</figcaption></figure></div>


The basket of CryptoPunks is an NFTX treasury filled with 135 NFTs, all equally valued. The treasury is effectively a floor-price CryptoPunk index fund.&nbsp;



Users deposit their NFTs in return for an ERC-20 vToken, PUNK, which represents claim on a random NFT contained within the treasury. Those tokens can then freely be exchanged, or even used to access a special Curve pool for further leverage.



By indexing those CryptoPunks, NFTX offers an alternative to floor prices (the lowest-valued NFT in a collection). Floor prices can be easily gamed: wash trading far below the lowest going price can immediately tank them, opening up all sorts of concerns for leveraged positions.



PUNK, on the other hand, trades on decentralized exchanges SushiSwap and Uniswap, allowing better price discovery on that particular collection. SynFutures new app offers exposure to that spot price, rather than transacting any individual CryptoPunks.



SynFutures plans to add more NFTs treasuries in the future, with Bored Apes and Pudgy Penguins and other top-10 collections floated as potential candidates.



<h2>Ethereum for NFT derivatives, Polygon for crypto</h2>



Another advantage of offering exposure on an index, rather than actual NFTs, is that it opens markets up for smaller bids. Trading CryptoPunks directly demands six-figure capital, but NFTures allows much smaller positions to be taken.



There are other concerns. Positions are all settled on Ethereum, which has recently experienced an uptick in usage, translating to increased transaction fees.&nbsp;



Trades on the app cost around $10 in gas fees right now and, to begin with, the app only allows users to take a fully-collateralized position worth up to 0.1 ETH ($168), eating into potential upside.



“It’s important for us to increase the position size. If the position size is too small, there’s just not enough financial incentive for someone to pay these fees,” SynFutures’ Lee said.



Liquidity can also be a problem on DEXs, especially for more exotic derivatives like these, resulting in unavailable trades and slippage.&nbsp;



Similar to SynFutures’ primary protocol, which supports futures trading for certain cryptocurrencies, NFTures is bootstrapped by capital provided by some of SynFutures’ strategic partners. The two platforms are completely separate, with separate liquidity pools, but NFTures does use SynFutures’ trading infrastructure.



“It all comes down to demand, which is why we&#8217;re doing it in phases. If we opened it up for everyone and there wasn&#8217;t enough liquidity, that would be an issue,” Lee said. “So we just want to make sure we monitor our liquidity, make sure it&#8217;s able to support the demand that comes in.”



Lee noted that as more demand comes into the app, the firm will expand liquidity either internally or through some of its external partners. The first couple of thousand on the waitlist have been given access first, and every week SynFutures will continue to open access.



SynFutures opted for Ethereum rather than its native Polygon to power its NFT app, despite the fees, as it doesn’t anticipate people coming in and out of positions too much, unlike actual crypto derivatives, which demand higher volume.



“All of the popular NFT collections — the major ones that actually have enough liquidity and market depth — also happen to be on Ethereum,” Lee said.



<h2>Tinder for NFT leverage, a gateway to DeFi</h2>



Lee expressed that NFT trading isn’t meant to be like crypto derivatives trading, which at the top end is typically earmarked by high volume.&nbsp;



By creating a trading platform in the style of modern dating apps, SynFutures hopes to attract a wider audience than only seasoned NFT traders (SynFutures&#8217; <a href="https://www.synfutures.com/terms" target="_blank" rel="noreferrer noopener">terms</a> prohibit a number of jurisdictions, though, including the US and UK).



“NFT prices don’t change that much anyway, so this is really more a mid-term bet that you’re making. You’re saying: ‘Okay, I think in the next month or two, I see CryptoPunks dropping, so I’ll open a position here,” Lee said.



Other startups are building NFT derivatives products, too. NFTPerps is currently in private beta on Ethereum Layer-2 network <a href="https://blockworks.co/tag/arbitrum" target="_blank" rel="noreferrer noopener">Arbitrum</a>, for one, but that’s pitched towards more crypto native speculators.



Lee sees NFTures serving a different purpose: introducing the broader NFT collector audience to the idea of DeFi. That means making them comfortable with the idea of speculating on NFTs in other ways than by simply buying and holding them.



“If you&#8217;re holding a piece and you don&#8217;t necessarily want to get rid of it, you could open a short position to cover some of your downside risk,” Lee said. “We call NFTs a gateway into crypto, we want this product to be a gateway into DeFi.”



Then again, some NFT collectors are in love with their JPEGs. Shorting them would just be rude.



Updated Mar. 22, 2023 at 2:21 pm ET: Added terms and conditions.



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Swipe Left To Short, Right To Long: Tinder for NFT Leverage Goes Live

Crypto media company Blockworks has launched a platform to track crypto bounties, grants and requests for proposal (RFPs) as a means to connect grantees to grantors and their funding opportunities.



Blockworks <a href="https://blockworks.co/grants">Grantfarm</a> organizes and tracks a list of programs and available RFPs. Individual and team users can filter results based on grant type, ecosystem and reward size.



The platform is free, and additional features are planned in the coming months.&nbsp;



&#8220;It&#8217;s our goal to provide a comprehensive public good that proactively tracks all grants programs,&#8221; Blockworks co-founder Jason Yanowitz said. &#8220;We believe this is an enormous value-add to our space, and we look forward to working with programs directly to keep their entries current over time.&#8221;



Blockworks’ director of grants and governance, who goes by the name Sov, joined the company in January to lead the effort.&nbsp;



Though sites such as <a href="https://sovs.notion.site/The-Common-Good-5f456493a9c44474a054d3d82c19ab56" target="_blank" rel="noreferrer noopener">The Common Good</a> and <a href="https://wiki.defillama.com/wiki/LlamaoGrants" target="_blank" rel="noreferrer noopener">LlamaoGrants</a> were well received by the community, Sov said, Grantfarm seeks to differentiate itself by including grant programs, as well as individual RFPs and bounties — and by allowing “dynamic search.”



One can narrow a search by selecting from five grant types: analytics, community, content, development or other. Project category buckets on the site include artificial intelligence, DeFi, centralized exchanges, NFTs, oracles, stablecoins and more than a dozen others.&nbsp;&nbsp;&nbsp;&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=1024&amp;h=1024" alt="" class="wp-image-49682" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/grantfarm_programs-1.jpg?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Screenshot of the Grantfarm database</figcaption></figure>



In addition to providing a place for these listings, Blockworks intends to feature content for grant programs on its website, including research, reports, and announcements from active programs in the sector.



“By providing a comprehensive, evolving list of grants, we can help give clarity to applicants and greater visibility and awareness to grant programs,” Sov said.&nbsp;



The launch comes 10 months after Blockworks <a href="https://blockworks.co/news/blockworks-unveils-new-research-offering">unveiled a new research offering</a> during its inaugural Permissionless event in Palm Beach, Florida.



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New ‘Grantfarm’ Platform to Track Crypto Grants

MetaMask Institutional is launching a marketplace to streamline staking for companies.



The marketplace, a bridge between institutions that are interested in staking and providers of staking, will go live on March 27. Initial partners on the marketplace include Allnodes, Blockdaemon and Kiln.



Following <a href="https://blockworks.co/tag/ethereum-merge" target="_blank" rel="noreferrer noopener">the Merge</a>, which moved the Ethereum network from <a href="https://www.blockworksresearch.com/glossary#proof-of-work-pow" target="_blank" rel="noreferrer noopener">proof-of-work</a> to <a href="https://www.blockworksresearch.com/glossary#proof-of-stake-pos" target="_blank" rel="noreferrer noopener">proof-of-stake</a> last year, institutions have shown greater interest in staking, MetaMask institutional product lead Johann Bornman told Blockworks.



“We’ve observed a real shift in interests from institutions into staking, particularly over the last six months,” Bornman told Blockworks. “With the important fork upgrade that’s happening with Shanghai and Capella, I think these are two very key landmark moments that are driving more institutional interest.”



Sharing Bornman’s sentiment, Tim Ogilvie, CEO of Staked, a non-custodial staking platform <a href="https://www.kraken.com/press/releases/kraken-acquires-staked-to-support-growth-and-resilience" target="_blank" rel="noreferrer noopener">acquired</a> by Kraken in December 2021, also notes that <a href="https://blockworks.co/news/ethereum-set-date-for-eth-withdrawals">the upcoming Ethereum upgrade on April 12</a> is likely going to usher in more institutional investors into the staking space.



“You’re going to see a lot of people coming in and staking, so the net of that will drive a lot of long-term staking demand,” Ogilvie said.



<h2>So why a marketplace?</h2>



Bornman tells Blockworks that existing institutions are bound to providers selected by their custodians, and this latest marketplace aims at providing companies with more choices for their staking provider.



It also plans to standardize reporting, he said.



“What we want to do is make it very easy for institutions to not to just take but also understand the rewards they’re receiving, what they are, what they look like across different time horizons,” he said.



MetaMask’s institutional staking marketplace could be a good first step in offering a simplified staking solution to institutional players, <a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">Blockworks Research</a> analyst <a href="https://www.blockworksresearch.com/research?author=ren" target="_blank" rel="noreferrer noopener">Ren Yu Kong</a> said. 



“I expect to see further integrated service offerings through MetaMask Institutional as the space grows so that the full range of an institution&#8217;s needs are fulfilled within one platform,” Kong said.



<h2>What are institutions staking?</h2>



Different institutions have different reasons to participate in staking.



For decentralized hedge funds — or crowd-sourced hedge funds — many of its staking initiatives are focused on liquid staking derivatives (LSDs) Bornman said.



In the case of Staked, many of its institutional clients include large venture funds, such as Pantera and Multicoin, asset managers such as Brevan Howard who are often running a fund strategy, and Wealthsimple, which runs different accounts for broader sets of individuals.&nbsp;



“Venture funds are making early investments in promising Layer-1’s that use staking as a security layer, and in those cases, they are looking to support a nascent investment,” Ogilvie said. “Asset managers [might] put assets into Ethereum because [they] have conviction around the story there.”



Ogilvie is optimistic that staking will eventually replace bonds as a large allocation in institutional portfolios.



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MetaMask Wants To Streamline Institutional Staking

Japanese electronic giant Fujitsu has filed a trademark application for a broad range of financial services — including crypto trading.



A US Patent and Trademark Office <a href="https://tsdr.uspto.gov/documentviewer?caseId=sn97842910&amp;docId=APP20230320124101#docIndex=1&amp;page=1" target="_blank" rel="noreferrer noopener">filing</a> last week showed the tech firm exploring services such as money and crypto exchange, digital asset management, brokerage services for crypto trading, payment transaction processing and securities trading.&nbsp;



The development was first <a href="https://twitter.com/KondoudisLaw/status/1638127134836244482" target="_blank" rel="noreferrer noopener">shared</a> by Mike Kondoudis, a USPTO licensed trademark attorney, on Twitter.



Fujitsu also seems to be interested in real estate, as the same trademark application included services for leasing or renting buildings and the purchase and sale of land.&nbsp;



The firm, which describes itself as the top digital services company in <a href="https://blockworks.co/tag/japan" target="_blank" rel="noreferrer noopener">Japan</a>, was originally established in 1923 as a joint venture to boost the production of equipment like generators and electric motors in Japan.&nbsp;



Fujitsu eventually became a pioneer of Japan’s telecommunications infrastructure, having built the country’s first computer and providing products like servers, PCs, laptops, tablets, storage hardware and air conditioners. It’s now a global brand.



The full extent of Fujitsu’s potential crypto ambitions aren’t known outside of the trademark filing. Blockworks has reached out to learn more. But the firm has dabbled in blockchain before, developing <a href="https://www.fujitsu.com/global/about/resources/news/press-releases/2019/0704-01.html" target="_blank" rel="noreferrer noopener">digital identity technology</a> in 2019 which relies on a distributed ledger to examine legitimacy during online transactions.



Fujitsu is also among other prominent Japanese companies that recently announced their intention to create a <a href="https://blockworks.co/news/japan-metaverse-economic-zone">metaverse project called Ryugukoku</a>. It includes the creation of a Japan Metaverse Economic Zone, which would integrate various metaverse platforms to support interoperability.&nbsp;



The idea is essentially meant to gamify Japan’s business ecosystem, where respective companies will bring in their unique talents to develop features. The concept is the brainchild of Hajime Tabata, a Japanese game director who previously worked for Square Enix.



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Japan’s Fujitsu Files Trademark for Crypto Services

A shift away from quantitative tightening and a fresh expansion of the US Federal Reserve’s balance sheet has industry majors bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) riding high.



Both assets are now up 69% and 49.5% on a year-to-date basis to around $28,000 and $1,800&nbsp; respectively, <a href="https://www.blockworksresearch.com/assets">Blockworks Research data</a> shows. In just the past couple weeks, they have rallied some 35% and 26% on the back of Silicon Valley Bank’s <a href="https://blockworks.co/news/bitcoin-momentum-store-of-value-banking-turmoil" target="_blank" rel="noreferrer noopener">historic failure</a>.



The crypto market performance is now vastly outstripping tech and growth stocks listed on the Nasdaq exchange by more than five times over the same period.



“Crypto, at a macro level, trades on the perceived fundamentals of the money supply outlook more so even than pure market beta,” Rich Falk-Wallace, CEO of data analytics firm Arcana told Blockworks. “As the money supply picture has changed overnight, so have crypto sector asset prices.”



Last year’s regime of quantitative tightening was a more significant factor affecting prices than the demise of many centralized crypto firms, digital asset trading firm Cumberland said via <a href="https://twitter.com/CumberlandSays/status/1638202345346531330?s=20" target="_blank" rel="noreferrer noopener">social media</a> on Tuesday.



<a href="https://blockworks.co/tag/ethereum-merge">Ethereum’s Merge</a> and Russia’s war in <a href="https://blockworks.co/tag/ukraine">Ukraine</a> were of lesser consequence for price, the firm said.



<h2>Bank liquidity driving bitcoin adoption</h2>



Now, as the Fed has taken swift action to prop up the US banking sector through its newly created Bank Term Funding Program in a step designed to “safeguard deposits,” investors are seeking out alternatives.



The central bank is weighing whether to hike rates further as it attempts to wrestle with inflation, though, amid the backdrop of liquidity provisions for banks, that is proving somewhat difficult.



Markets are now pricing in a 25 basis point jump instead of the previously conceived 50, to be decided at the next upcoming FOMC meeting on Wednesday, according to CME Group’s <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">FedWatch tool</a>.&nbsp;



The easing of further rate hikes would be the first time the Fed has made such a move since it began its aggressive campaign in March of last year.



Sunday also saw the <a href="https://www.bbc.com/news/business-65010255" target="_blank" rel="noreferrer noopener">announcement</a> from central banks around the world to bolster liquidity provisions in US dollars as they sought to soothe the crisis of confidence in the global financial system.



“None of this is exactly quantitative easing the way we’re used to it, but it’s clear that quantitative tightening is not just ending but headed in the other direction,” Cumberland <a href="https://twitter.com/CumberlandSays/status/1638202348936871940?s=20" target="_blank" rel="noreferrer noopener">tweeted</a>.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13155519/embed#?secret=kF71i4J3O8" data-secret="kF71i4J3O8" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Bitcoin and ether are easily outperforming major indexes so far this year</figcaption></figure>



Whatever you term it, the actions are translating to further upside for digital assets, Glassnode said in its weekly <a href="https://www.youtube.com/watch?v=5tH_66pz0Us&amp;ab_channel=glassnode" target="_blank" rel="noreferrer noopener">video report</a>, Tuesday.



Exploring the underlying strength of the trend, Glassnode pointed to several on-chain activity metrics in an attempt to analyze the fundamentals backing the rally.



Looking at the transaction counts, new addresses and new entities for bitcoin over a monthly basis versus its yearly average performance, Glassnode said the data was showing a “very healthy uptick.”



“Bitcoin has seen one of the most explosive weekly rallies in history,” Glassnode wrote in a slide at the end of its presentation. While there were some signs of profit-taking at play, it remains “relatively light” with respect to older coins, hinting at a strong conviction to the upside, it said.



Cumberland agrees: “The flow we are seeing on the OTC desk is reflecting the new reality. It has been extremely focused in BTC and ETH, and we’re seeing very little profit-taking, despite the fact that BTC is up 70% on the year; our flow ratio right now shows roughly twice as many buyers as sellers.”



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Bitcoin Price Rally Aligns With ‘Healthy Uptick’ in On-chain Metrics

EVE Online creator CCP Games is going Web3, having raised $40 million to develop a blockchain-integrated triple-A spinoff set within its sandbox sci-fi universe.



CCP Games said the game will build upon its blockchain-related findings from its research and development team.



“With advancements made within blockchain, we can forge a new universe deeply imbued with our expertise in player agency and autonomy,” CCP Games head Hilmar Veigar Pétursson said in a statement, <a href="https://www.projectawakening.io/" target="_blank" rel="noreferrer noopener">published</a> under a &#8220;Project Awakening&#8221; domain name.



While the Icelandic studio’s Web3 title — currently unnamed — will take place within the EVE Online universe, it will be standalone. Crypto-forward venture capital giant Andreessen Horowitz (a16z) led the round, with participation from Makers Fund and BITKRAFT Ventures.



Key game elements will utilize smart contracts with attention paid to composability, open third-party development and persistence of data, CCP Games said.&nbsp;



It’s unclear whether the title will interact with public blockchain networks like Ethereum, as is the case with metaverse offerings such as Decentraland and The Sandbox. Blockworks has reached out for comment.



In any case, a venerable studio in CCP Games embracing Web3 is a milestone for the budding entertainment sector.



EVE Online, published 20 years ago, has long been a staple of the massively-multiplayer genre, still averaging more than 273,000 daily players with a total base of <a href="https://mmo-population.com/r/eve" target="_blank" rel="noreferrer noopener">around</a> 9.5 million accounts. Its grand-scale battles have become fixtures of gaming <a href="https://www.pcgamer.com/the-5-greatest-moments-in-eve-online-history/" target="_blank" rel="noreferrer noopener">history</a> and internet lore.



A fraction of that player base could present a considerable boon for blockchain gaming, which sees considerably less <a href="https://blockworks.co/news/metaverse-platforms-set-the-record-straight-about-daily-active-users">user stats</a> in recent times.



“It’s a great sentiment, in general, having a serious team backed by a respectable firm for the Web3 gaming market,” Andrii Yasinetsky CEO and co-founder of NFT data analytics firm Mnemonic told Blockworks.&nbsp;



Blockchain gaming could bring regular users to Web3 and attract further investment for other developers looking to build similar products, Yasinetsky said.



An executive at Fortnite maker Epic Games <a href="https://blockworks.co/news/epic-games-fortnite-store-crypto-blockchain" target="_blank" rel="noreferrer noopener">recently noted</a> nearly 20 third-party, crypto-enabled games are expected to hit its online store over the next year.



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EVE Online Creator Is Making a Triple-A Web3 Game

While equities struggle to bounce back from their <a href="https://blockworks.co/tag/banking" target="_blank" rel="noreferrer noopener">banking</a> crisis-induced slump, cryptos have been able to stay in the green — and it’s partially due to the Federal Reserve’s current course of action, analysts say. 



“Bitcoin had been mostly declining, up until the Fed injected liquidity into the banking system,”&nbsp;



Dessislava Aubert, research analyst at Kaiko said during a call on Tuesday. “Both the Fed and the Swiss National Bank intervened.”



The central bank recently booked the biggest increase to its balance sheet since March 2020. A reversal of Fed policy as certain banks need more liquidity as economic conditions worsen is a major switch from the near-zero interest rates investors have been used to for the past decade.&nbsp;



“​​The new Fed emergency program has been seen as a form of quantitative easing,” Aubert said. “We saw last week that the Fed&#8217;s balance sheet increased by $200 billion, so a lot of people were quick to say that it is a reversal of the quantitative tightening cushion over the past 10 months…basically, it all depends on what happens [Wednesday].”



Cryptos have also been impacted by the recent depegging of Circle’s <a href="https://blockworks.co/tag/usdc" target="_blank" rel="noreferrer noopener">USDC</a> from its dollar mooring, which has also been linked to the banking crisis. 



USDC fell to an all-time low of around $0.87 on March 10 after Silicon Valley Bank (SBV) — where $3.3 billion in USDC reserves were held — collapsed. 



Binance’s native token, <a href="https://blockworks.co/tag/busd" target="_blank" rel="noreferrer noopener">BUSD</a>, was also removed from many trading platforms. While it still exists on Binance, the delisting of BUSD across most centralized exchanges is really the death of the token, Clara Medalie, Kaiko’s head of research, said on the call. 



“Tether is dominant on centralized exchanges, and centralized exchanges account for the vast majority of trade volume and crypto markets,” Medalie said. “What we&#8217;re seeing is risk essentially concentrated into a single stablecoin, whereas even BUSD was a nice counterweight to USDT. Now that we won&#8217;t have that in the future, it will be interesting to see whether USDC will be able to reclaim some market share.”&nbsp;



How the stablecoin market shakes out will determine how much fiat is floating in cryptocurrency markets, according to analysts.&nbsp;



Of crypto trades involving fiat currently on the market, 47% are executed with dollars, according to Kaiko.&nbsp;



“The main question is that in the United States now that it&#8217;s increasingly difficult to deploy US dollars on exchanges…will the euro emerge as sort of the next dollar? Or will there be another fiat currency?” Medalie said.



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Bitcoin Investors Can Thank the Fed, Kaiko Researchers Say

As the next Bitcoin halving approaches, industry experts are closely examining the implications for price and hash rate over a long-term horizon.



The <a href="https://www.blockworksresearch.com/glossary#halving" target="_blank" rel="noreferrer noopener">halving</a> event, set to occur around mid-April 2024, is expected to have a significant impact on the crypto market, according to a report published Monday by research firm BitOoda.



The report suggests the key driver of bitcoin&#8217;s (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) price is the flow of funds into the ecosystem — currently amounting to about $25 million per day — to absorb the roughly 900 new BTC entering circulation through <a href="https://blockworks.co/tag/bitcoin-mining" target="_blank" rel="noreferrer noopener">mining</a>; blocks are mined, on average, every 10 minutes, minting 6.25 bitcoins each.



At the halving, the supply of new bitcoins received by miners — also known as the coinbase reward — is reduced by half. This happens all at once, from one bitcoin block to the next.



The report also notes sentiment can play a role in price discovery — where the investors see the bitcoin market going.&nbsp;



Looking at historical data, BitOoda said the six months following each of the prior halvings have seen an increase in price, with the most significant increase occurring after the first halving in 2012 when the price surged more than ten times its value.



In 2016, bitcoin’s price increased by 53% six months post-halving while the 2020 halving was preceded by a mostly flat price — excluding the exogenous shock of the March COVID-driven sell-off, 60 days prior to the event, BitOoda said. Bitcoin’s price then gained more than 70% over the following 180 days.



While the dollar value of mined BTC initially fell after each halving, the post-halving fund flows have always caused the price to recover throughout Bitcoin’s history, <a href="https://cryptoquant.com/asset/btc/chart/exchange-flows/exchange-netflow-total?exchange=all_exchange&amp;window=DAY&amp;sma=0&amp;ema=0&amp;priceScale=log&amp;metricScale=linear&amp;chartStyle=column" target="_blank" rel="noreferrer noopener">data</a> by CryptoQuant shows.



The effect has become more muted over time, CryptoQuant told Blockworks, with the impact of each halving’s reduction in supply, diminishing relative to other factors.



“Adoption, institutional demand, easier access to bitcoin and macro factors become more important for bitcoin’s price growth,” Julio Moreno, CryptoQuant’s head of research, said.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1280" height="571" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=1024&amp;h=1024" alt="" class="wp-image-49674" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=1280 1280w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/03/image-4.png?w=80 80w" sizes="(max-width: 1280px) 100vw, 1280px" /><figcaption class="wp-element-caption">Price of bitcoin compared against the flows of capital to derivative exchanges | Source: CryptoQuant</figcaption></figure>



Moreno pointed out that when capital flows are growing — meaning demand to trade bitcoin is increasing — the asset appreciates and vice versa.



<h2>The Bitcoin price correlation to hash rate</h2>



The Bitcoin ecosystem is likely to continue experiencing significant growth in the coming years, with both price and hash rate expected to increase steadily leading up to the next halving event in 2024, the report notes.



Price moves tend to lead hash rate, with sustained hash rate growth typically driven by price appreciation, the firm said, although this is <a href="https://www.bitrawr.com/terminal/hashrate-vs-price" target="_blank" rel="noreferrer noopener">debated</a>.



The Bitcoin network’s hash rate is a measure of the computing power dedicated to the network by miners worldwide. It represents the total number of hashes that can be performed by all miners in a given period and is measured in exahashes per second (EH/s).



Based on <a href="https://ycharts.com/indicators/bitcoin_network_hash_rate#:~:text=Bitcoin%20Network%20Hash%20Rate%20is,51.48%25%20from%20one%20year%20ago." target="_blank" rel="noreferrer noopener">data</a> from YCharts, the current bitcoin network hash rate is 320.42 EH/s — up about 51% from a year ago but down 8.6% on the day. 



The increase in hash rate over the past year is likely due to the increasing number of miners joining the network, as well as the adoption of more powerful mining equipment. 



This has resulted in greater competition for mining rewards and an increase in the network&#8217;s overall security.



The increasing number of bitcoin miners is a reflection of the improving market sentiment, as seen in the upward movement of spot prices for digital assets. This comes at a time when industry participants are re-evaluating a risk-on approach to <a href="https://blockworks.co/news/bitcoin-momentum-store-of-value-banking-turmoil">protect wealth</a>.



An analysis of hash rate scenarios shows a link to the estimated power price curve, suggesting the convergence of ASIC technology to leading-edge semiconductor processes will bring next-gen hardware to the market in late 2023, with volume shipments expected in 2024. 



“As more powerful and efficient ASICs have been developed, hashrate has experienced an acceleration as miners enjoy a lower capital and operational cost per terahash deployed,” Moreno said. “The latest generation of ASICs are about 50% to 100% more powerful than the previous models.”



BitOoda estimates the theoretical &#8220;marginal maximum hashrates&#8221; could achieve 432 EH/s by the end of 2023 and 721 EH/s by the end of 2024, assuming power prices remain below $50 per megawatt hour.



Though the reality is likely to be closer to 400 EH/s by the end of 2023, reflecting a significant amount of older equipment still in use, the research firm said.



Longer term, the security of the Bitcoin network will depend more on transaction fees. Miners’ production costs will become less a function of their expectations of coinbase rewards, as Satoshi observed.



“In later years, when new coin generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around,” Satoshi <a href="https://satoshi.nakamotoinstitute.org/posts/bitcointalk/65/" target="_blank" rel="noreferrer noopener">wrote</a> in 2010.



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