Bessie Liu


<p>Shortly after <a href="https://blockworks.co/news/noble-solve-cosmos-liquidity" target="_blank" rel="noreferrer noopener">coming out</a> of stealth, token protocol Noble has announced it has partnered with Circle to bring USD Coin (USDC) natively to the Cosmos ecosystem in Q2.</p>



<p>USDC is the second-largest stablecoins in the cryptocurrency ecosystem behind Tether, and is pivotal to many decentralized finance (DeFi) projects. It is often used as collateral for lending and borrowing to generate yield due to its ability to remain steadily pegged to the US dollar.</p>



<p>Although it recently went through a <a href="https://blockworks.co/news/stablecoins-peg-usdc-all-time-low" target="_blank" rel="noreferrer noopener">few hiccups</a> following the collapse of Silicon Valley Bank and Silvergate bank, the stablecoin has now regained its peg to the dollar.</p>



<p>Noble CEO Jelena Djuric told Blockworks in an interview that the Cosmos inter-blockchain communication protocol (IBC) ecosystem hasn&#8217;t yet gained a native fiat-backed stablecoin that is not only highly liquid but also fully collateralized on its network.</p>



<p>“That’s about to change with Noble’s first issuance partner, Circle,” she said. “They’re bringing a native USDC to Cosmos for the first time.” Noble, a token issuance protocol, will help facilitate USDC&#8217;s management and issuance.</p>



<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"><p lang="en" dir="ltr">This is a huge moment for our ecosystem.<a href="https://twitter.com/cosmos?ref_src=twsrc%5Etfw">@Cosmos</a> has never had a native, fiat-backed stablecoin that is highly liquid &amp; fully collateralized. <br><br>For the first time in <a href="https://twitter.com/cosmos?ref_src=twsrc%5Etfw">@Cosmos</a> history, 50+ IBC-enabled blockchains (&amp; counting!) will soon be able to access USDC natively via IBC.</p>&mdash; Noble (@noble_xyz) <a href="https://twitter.com/noble_xyz/status/1640670153535897600?ref_src=twsrc%5Etfw">March 28, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Currently on Cosmos, the major stablecoins can only be accessed through <a href="https://blockworks.co/news/bridge-protocols-race-to-win-consumer-trust" target="_blank" rel="noreferrer noopener">bridge protocols</a> such as Gravity and Axelar. Estimates suggest around 100 different bridged USDC assets currently exist across the Cosmos landscape.</p>



<p>Now that DeFi protocols can stick with just one single official stablecoin, Noble hopes this partnership  will inject and and facilitate new liquidity in the ecosystem. Circle first <a href="https://www.circle.com/en/pressroom/circle-announces-next-wave-of-usdc-support-for-multi-chain-ecosystem" target="_blank" rel="noreferrer noopener">flagged</a> intent to issue USDC on Cosmos last September.</p>



<p>“It’s also for the users themselves to have a seamless process of accessing native assets in the ecosystem,” Djuric said. “At the end of the day, we’re seeking to rectify the challenges that users and app chains face when interacting with bridge assets.”</p>



<p>The decision to quickly onboard USDC onto Cosmos is also related to the fact that popular lending protocol dYdX will soon migrate from Ethereum onto the Cosmos IBC.</p>



<p>“We’re very much doing this in preparation for dYdX’s launch. We see this as a huge moment for the Cosmos and the app chain thesis because this is a project that has already got a lot of success on Ethereum,” Djuric said.</p>



<hr class="wp-block-separator">
<p><strong>Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>
<br>
<p><strong>Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.</strong></p>
<br>
<p><strong>Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.</strong></p>
<hr class="wp-block-separator">


Circle Stablecoin USDC To Launch on Cosmos

John Gilbert


<p>Aptos led the January bull run with a 470% return for the month. With little on-chain activity and only $60 million in TVL, you may be asking why. </p>



<p>Advocates argue that these gains were the result of ecosystem announcements. Critics point to its opaque token distribution as a sign of predatory tokenomics.</p>



<p>But what tokenomic clues signal predatory behavior? And why is it a common accusation?</p>



<p>Tokenomics turn predatory when project insiders use supply controls to artificially drive demand and take profits at the expense of others.</p>



<p>These insiders are like wolves in wolves clothing — a mixed bag of venture capitalists and angel investors. The flock, conditioned to follow the flow of smart venture capital, chase the momentum despite warnings.&nbsp;&nbsp;</p>



<p>Some find a distinct joy in arguing that all crypto tokens fall under this model. But the economic incentives, supply controls, utility and revenue sharing vary greatly between digital assets. Our previous <a href="https://blockworks.co/news/what-is-tokenomics">Investor&#8217;s Guide on Tokenomics</a> explains the different models in more detail. In this article, we will explain how some models are more prone to exploitation than others.</p>



<h2><strong>Tokenomics gone wrong</strong></h2>



<p>A project&#8217;s tokenomics is a blueprint that outlines the key characteristics and factors that influence its value and price. A token issuer, just like a house architect, may include exploits in its design.&nbsp;</p>



<p>But because the number and severity of these exploits exist on a spectrum, it is hard to pinpoint exactly when they turn predatory. Unfortunately, an accusation can only prove conclusive if someone makes it after project insiders use a design exploit. And even then, the charge still requires evidence of intent to qualify.&nbsp;</p>



<p><strong>This article in no way makes such an accusation against the examples listed. And it should not be interpreted as investment advice.</strong> Instead, it explains the most recent concerns and extrapolates a list of red flags to avoid.&nbsp;&nbsp;&nbsp;</p>



<h3>Flag 1: Misleading distribution disclosures</h3>



<p>Token distribution disclosures are essential to understanding the risk of when, who and why insiders will take profits. An issuer with predatory intent may make the disclosure appear less risky to attract investors.</p>



<p>For example, many could perceive Aptos&#8217; supply schedule disclosure as misleading. The project started with a total of 1 billion tokens (none of which were made available through public sale). Here is how they distributed the total supply:</p>



<figure class="wp-block-table"><table><tbody><tr><td>Community</td><td>51.02%</td><td>510,217,359.77</td></tr><tr><td>Core Contributors</td><td>19.00%</td><td>190,000,000.00</td></tr><tr><td>Foundation</td><td>16.50%</td><td>165,000,000.00</td></tr><tr><td>Investors</td><td>13.48%</td><td>134,782,640.23</td></tr></tbody></table></figure>



<p>The <a href="https://aptosfoundation.org/currents/aptos-tokenomics-overview" target="_blank" rel="noreferrer noopener">post</a> stated, &#8220;All investors and current core contributors are subject to a four-year lock-up schedule with no <a href="https://blockworks.co/price/APT">APT</a> available for the first twelve months.&#8221; These two categories amount to 32.48% of the total supply.&nbsp;</p>



<p>The project made the distribution schedule of the other two categories vague. The post states that &#8220;these tokens <strong>are anticipated</strong> to be distributed over a ten-year period&#8221; and that after an immediate distribution of 130M tokens, 1/120 of the remainder &#8220;<strong>are anticipated</strong> to unlock each month.&#8221;&nbsp;&nbsp;</p>



<p>Using hedging language like &#8220;<strong>are anticipated</strong>&#8221; may seem irrelevant at first glance, but it creates ambiguity shielding the project from making a firm commitment not to sell.</p>



<p>It also stated that insiders across all categories were staking 82% of the supply. Consequently, popular sites have used the staked data to calculate a circulating supply of roughly 15% to 18% (currently 162,086,803).&nbsp;</p>



<p>This adds to the confusion because CoinGecko&#8217;s circulation supply definition states, &#8220;It is comparable to looking at shares readily available in the market (<strong>not held &amp; locked by insiders, governments</strong>).&#8221;</p>



<p>But according to Aptos co-founder <a href="https://twitter.com/moshaikhs/status/1582470822886637568?s=20&amp;t=RUz9LN39xHYMg6cyUA2mSQ" target="_blank" rel="noreferrer noopener">Mo Shaikh</a>, stakers can unlock tokens every 30 days.&nbsp;</p>



<p>This distribution is not evidence that the project intended to mislead investors. But, when combined with the supply schedule graph, one could argue that they made it appear as if 82% of the supply (the same percentage of tokens staked) can&#8217;t become available for at least a year, when in fact, only 32.48% is subject to an official 1-year lock-up.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh3.googleusercontent.com/2845Ltk40l29VnMfRtQyjIwyx84dbS8-j5S4ZgmZH9WCBm4xVWG7VxN82mCxosBTGIJZb2Z-d7P_na-eliYz_R1dr_C77w0mge05gHvSrESbjlMMrB_Jqz_LG7t5OujehYQq5mSmzF3vEOnyJwJvI_4" alt=""/></figure>



<p>The tokenomics post did state that the schedule is an estimate and included a disclaimer stating that it is subject to change without notice. But this has not prevented investors from <a href="https://youtu.be/6oywqy5AMsk?t=147" target="_blank" rel="noreferrer noopener">using the graph</a> to share a popular investing thesis predicated on the belief that close to 8.5 million (85%) of APT is locked for a year.&nbsp;</p>



<p>The limited liquidity on exchanges and the massive supply at the disposal of project insiders have led some to make accusations of price manipulation.</p>



<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"><p lang="en" dir="ltr">Aptos dev team wallet has started feeding the Korean ducks, ~$20mm in spot sent to Binance in the last hour.<br><br>$1b in inventory remains in the wallet.<br><br>The tightly controlled supply has activated. <a href="https://t.co/Ll75mTX0TQ">pic.twitter.com/Ll75mTX0TQ</a></p>&mdash; light (@lightcrypto) <a href="https://twitter.com/lightcrypto/status/1619155047618850818?ref_src=twsrc%5Etfw">January 28, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3>Flag 2: Lack of utility</h3>



<p>A token&#8217;s utility is a crucial aspect in determining its value. If it has no utility, its price is purely the result of speculation, leaving it vulnerable to manipulation by early investors and insiders.</p>



<p>Some see the <a href="https://blockworks.co/price/dydx">dYdX governance token</a> as an example of broken utility. While the platform uses it to incentivize trading activity and provide liquidity on the dYdX platform, there is very little reason for investors to hold the token once earned. There is no revenue-sharing model or meaningful governance incentives. The protocol removed all previous staking opportunities. And now the only motivation left is trading fee discounts.&nbsp;&nbsp;</p>



<p>Read more on the <a href="https://www.blockworksresearch.com/assets/dydx/tokenomics" target="_blank" rel="noreferrer noopener">Blockworks Research analysis of dYdX tokenomics</a>.</p>



<p>&#8220;To me [the governance feature] is just disingenuous,” Jeff Dorman, chief investment officer at Arca, said of dYdX. “You can&#8217;t ever actually participate in governance, because six holders own 90% of the token.&#8221;</p>



<p>This lack of utility makes it easier for project insiders to potentially generate speculative demand by delaying insider token unlocks, leading to, as Dorman states, &#8220;time-based selling pressure rather than merit-based buying.&#8221;</p>



<p>DYdX is one of the tokens that made the leaderboard for top-performing tokens in January. It increased by 210% from the start of the year. But this bull run coincided with an <a href="https://twitter.com/dydxfoundation/status/1618302395603161114?s=20&amp;t=i81l9j2-VcC-hq0q9Yn_iQ" target="_blank" rel="noreferrer noopener">announcement</a> to &#8220;postpone the initial release date applicable to investor $DYDX tokens to Dec 1, 2023.&#8221;&nbsp;</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/eQCh0m2qy8FPfovaLiF42dsaG_Pv1kxoD0z_A99FV4XgzaFWMxFH3Y3fwi-orV-TYhicZiJ6aWry_IXhNRnZN8GYKpsrJPWx97oabVvK_6Xg1uIS1LgRrswfNd777ic7O-rnIlTKlbg30rFOI9LFG0Q" alt=""/></figure>



<p>While this correlation is not direct proof that the announcement drove the price, it supports the narrative that tokens with weak utility are vulnerable to this type of manipulation.&nbsp;</p>



<h3>Flag 3: Conflicts of interest</h3>



<p>How a project makes money and shares it with its investors is crucial in determining the alignment of incentives. In the unregulated world of cryptocurrency, many projects choose not to share revenue with token holders due to their close resemblance to a security. And, in some cases, such as dYdX, all revenue is directed to an <a href="https://www.ar.ca/blog/dydxs-broken-tokenomics-and-pointless-vc-unlocks" target="_blank" rel="noreferrer noopener">LLC</a>.&nbsp;</p>



<p>This arrangement can lead to a conflict of interest between token holders and inside investors. The lack of shareholder obligations makes project owners less incentivized to drive token demand.&nbsp;</p>



<p>Tokens that behave like commodities or currencies can fit this model. However, when there is no practical use or widespread adoption as a payment solution, the token acts more like an inflationary store of value. In dYdX&#8217;s case, the token saw an 82% decrease in value since its launch in September 2021.&nbsp;</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh4.googleusercontent.com/nq3rEw7tvEP43qvAfxjYVwff5OVMwZrferaHl5z8q1xQd9vqmVPNM7QaGvUyG4i9EJBpqhi29FYO-UiyAL1zZVX0uBqqxpd2asmXDxnCRwZHiWUXa5u9SWf1AvgS5X5i0AhL1IklgHimG1JXZeTfMVU" alt=""/></figure>



<p>Dorman explained that there are many creative ways to drive demand for the dYdX token.&nbsp;</p>



<p>&#8220;One is to feed some of those revenues back through the token, either in the form of buybacks, or in the form of building up the DAO treasury. They could have partnerships with other platforms or protocols where the dYdX token has some value within someone else&#8217;s ecosystem. What you can&#8217;t do is just assign zero value and just say it&#8217;s a governance token, where you can&#8217;t ever actually participate in governance.&#8221;</p>



<p>Though, when a project like dYdX has scheduled token unlocks, there is a real temptation to pull the postponing lever instead of implementing the changes Dorman listed.&nbsp;</p>



<p>He added: &#8220;In my opinion, we&#8217;d be better off if there were no unlocks. It doesn&#8217;t incentivize any parties, the investors nor the issuing company to do anything before you get to unlock that value. And two, it restricts and floats and the tradable asset in a way that artificially creates gains.&#8221;</p>



<h2><strong>Understanding the wolf of crypto</strong></h2>



<p>The common occurrence of predatory tokenomics has led many skeptics to claim that the problem is inherent to crypto. But if you take a closer look, the pattern reveals that the wolf behind the wolf mask isn&#8217;t necessarily coming from within the industry.&nbsp;</p>



<p>&#8220;Most of these projects in their early days are very reliant on venture capital money,” Daniel McAvoy, blockchain and funds attorney at Polsinelli, said. “You know, there isn&#8217;t really a great way to get off the ground without going that route.”</p>



<p>“So in addition to equity and a slug of tokens, the VCs also want a hand in helping determine what the tokenomics are even going to be.&#8221;</p>



<p>He said that the one-year locking period is &#8220;almost universal&#8221; in the token purchase agreements and that a big reason for that is, &#8220;Under Securities Act Rule 144, there&#8217;s potentially an ability to resell something without requiring registration of that resale — so long as there&#8217;s been a one year holding period with respect to the token.&#8221;</p>



<p>If based in the US, venture capital fund managers must take reasonable steps to comply with SEC guidelines. But in addition to staying compliant with rules on the offer, sale and resale of securities, McAvoy said, &#8220;there&#8217;s also the fiduciary responsibilities that the venture capital manager has to their clients.&#8221;</p>



<p>He added: &#8220;The venture managers have a duty of care and loyalty. One of the things that they&#8217;re supposed to try and do is maximize returns for their investors. And to do so in a manner that is as close to compliant as possible. So there&#8217;s a bit of a push and pull. The duties that you have to your investors don&#8217;t necessarily match up with your desire for a particular protocol to succeed.&#8221;</p>



<p>So if a venture capital fund has a hand in influencing a project&#8217;s bad tokenomics, it may benefit from exiting a major position in a way that avoids potential fallout. Their playbook is to argue that their sale of an unregistered security qualifies for exemption and is in the interest of their investors. The SEC regularly enforces and takes into account the fiduciary responsibility of these fund managers to their investors, but they do not provide token holders the same degree of protection.&nbsp;&nbsp;</p>



<p>The reliance on venture capital funding and uneven enforcement of securities law fuel this predatory behavior. It creates an environment where token issuers are afraid to work in the interest of token holders and venture capital funds are encouraged to take profits at token holders expense.&nbsp;</p>



<p>This sad reality is an extension of the hyper-financialization problem seen across markets – where powerful institutions use the concentration of capital to drive speculative bubbles and extract wealth from new participants.&nbsp;</p>



<h2><strong>Final thoughts</strong></h2>



<p>Crypto has a complicated relationship with the &#8216;wolf of trading&#8217; archetype. News about venture capital investment in a particular project can carry credibility for some and incite suspicion in others. This division combined with the inherent competition between projects makes it difficult to navigate for an uninformed newcomer.&nbsp;</p>



<p>And while there are many innovative projects with fair launch distribution and real world utility embedded in their tokenomics, they often get lost in the socially engineered hype of well connected and venture capital-backed tokens.</p>



<hr class="wp-block-separator">
<p><strong>Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>
<br>
<p><strong>Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.</strong></p>
<br>
<p><strong>Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.</strong></p>
<hr class="wp-block-separator">


When Tokenomics Turn Predatory, or How To Spot the Wolf

Ben Strack

<div id="highlights-block_63498df225c23" class="highlights">
        <ul>
                <li>Crypto exchange Kraken seeks to build out an NFT marketplace and more spot trading pairs in UK after latest hire</li>
                <li>BlockFi’s co-founder takes chief operating officer post amid executive reshuffle</li>
            </ul>
    
</div>



<p>Gemini’s former head of UK has joined crypto exchange <strong>Kraken</strong> to lead its UK operations and drive crypto adoption in the region.&nbsp;</p>



<p>Prior to Kraken and Gemini, <a href="https://www.linkedin.com/in/blairhalliday/?originalSubdomain=uk" target="_blank" rel="noreferrer noopener"><strong>Blair Halliday</strong></a><strong> </strong>held senior compliance roles at Circle, CashFlow, ICE and Paysafe Group. He also spent 14 years at NatWest Group and spent a year at JPMorgan.&nbsp;</p>



<p>“Households are actively thinking about the cost of living and personal finances, and we’re proud to highlight a viable alternative to the current legacy financial system,” Halliday said in a statement. Similarly, as institutions further enter the marketplace they’re in search of crypto firms that complement the highest level of security with outstanding products and services.”</p>



<p>Kraken intends to continue hiring in the country and looks to expand its UK product suite with an NFT marketplace and additional spot trading pairs against the British pound sterling (GBP).</p>



<p><strong>BlockFi</strong> co-founder <a href="https://www.linkedin.com/in/founderflori/" target="_blank" rel="noreferrer noopener"><strong>Flori Marquez</strong></a> is now the company’s chief operating officer, the crypto exchange revealed late last week.</p>



<p>In addition to Marquez taking on a new role, <a href="https://www.linkedin.com/in/acheela/" target="_blank" rel="noreferrer noopener"><strong>Amit Cheela</strong></a> is now BlockFi’s new chief financial officer. Formerly working for ESL Investments, Coastal Investment Management and PwC, he replaces Tony Lauro, who will join BlockFi’s board of directors.</p>



<p><a href="https://www.linkedin.com/in/rob-loban-485a878/" target="_blank" rel="noreferrer noopener"><strong>Rob Loban</strong></a>, who joined BlockFi in 2020, was promoted to chief accounting officer, while <a href="https://www.linkedin.com/in/crowellmegan/" target="_blank" rel="noreferrer noopener"><strong>Meg Crowell</strong></a>, who came to BlockFi in 2019, is now its chief people officer. Crowell replaces Laura Cooper, who is now an adviser for the firm.&nbsp;</p>



<p>A BlockFi spokesperson declined to comment about the moves.&nbsp;</p>



<p>The executive reshuffle comes a few months after the company <a href="https://cms.blockworks.co/ftx-reaches-deal-to-acquire-blockfi-for-up-to-240m/" target="_blank" rel="noreferrer noopener">signed agreements with FTX US</a> for a $400 million revolving line of credit, as well as for the crypto exchange to buy BlockFi for up to $240 million based on performance triggers.&nbsp;</p>



<p><a href="https://www.linkedin.com/in/-brian-roberts/" target="_blank" rel="noreferrer noopener"><strong>Brian Roberts</strong></a>, who was NFT marketplace <strong>OpenSea</strong>’s chief financial officer for nearly a year, has left the role.&nbsp;</p>



<p>“I had the rare opportunity to build a team literally from the ground up and handpicked game changers,” he said in <a href="https://www.linkedin.com/feed/update/urn:li:activity:6984258573081989120/" target="_blank" rel="noreferrer noopener">a LinkedIn post</a>. “I’ve been working closely with [CEO] Devin Finzer and the supremely capable <a href="https://www.linkedin.com/in/justinjow/" target="_blank" rel="noreferrer noopener"><strong>Justin Jow</strong></a> to ensure a smooth transition, and I will be staying on as an advisor to the company.”</p>



<p>Jow joined OpenSea as vice president of finance earlier this year after a three-year stint at Uber. It is unclear whether he will formally take over the CFO role.</p>



<p>A spokesperson for OpenSea declined to comment.</p>



<h3>New CEOs</h3>



<p><strong>The dYdX Foundation</strong> named <a href="https://www.linkedin.com/in/charlesdhaussy/" target="_blank" rel="noreferrer noopener"><strong>Charles d’Haussy</strong></a> its new CEO to help grow the decentralized cryptocurrency exchange protocol via partnerships with development teams and other stakeholders.</p>



<p>“The technology, teams, and community are remarkable and share the same mission that has motivated me for decades: democratizing access to financial opportunities,” d’Haussy said in a statement.&nbsp;</p>



<p>The appointment follows dYdX revealing in January that it would launch <a href="https://dydx.exchange/blog/v4-milestones" target="_blank" rel="noreferrer noopener">a new version of the protocol</a> — the mainnet launch of which is scheduled for the second quarter of 2023.</p>



<p>The executive joins the nonprofit from ConsenSys, where he led the company’s growth efforts and global business development in the Asia-Pacific region. Before that, he worked as head of fintech for the Hong Kong government.&nbsp;</p>



<p>Web3-focused research and development company <strong>Edge &amp; Node</strong> appointed co-founder <a href="https://www.linkedin.com/in/1stramirez/" target="_blank" rel="noreferrer noopener"><strong>Brandon Ramirez</strong></a> as interim CEO. Despite the interim title, a spokesperson told Blockworks that the company is not searching for a new chief executive.</p>



<p>Working as Edge &amp; Node’s head of research and product for the last two years, Ramirez replaces former CEO and co-founder Yaniv Tal, who will continue serving on the company’s board of directors.&nbsp;&nbsp;</p>



<p>Edge &amp; Node was created by the core protocol team behind The Graph, an indexing protocol for organizing blockchain data. Ramirez co-founded The Graph and was the lead architect of its initial protocol.</p>



<p>“When we started working on The Graph in 2017, developers had to make the difficult choice between building an application that was truly decentralized or one that offered a great user experience,” Ramirez said in a statement. “I&#8217;m proud of the role The Graph has played in web3 and…I&#8217;m excited to build on that momentum, giving developers and entrepreneurs a powerful decentralized data layer, with open APIs, upon which they can change the world.”&nbsp;</p>



<h3>In case you missed it</h3>



<p><strong>NYDIG</strong> has <a href="https://cms.blockworks.co/nydig-lays-off-a-third-of-its-staff-report/" target="_blank" rel="noreferrer noopener">laid off about a third of its staff</a> — amounting to roughly 110 people, <a href="https://www.wsj.com/articles/crypto-broker-nydig-lays-off-one-third-of-staff-in-effort-to-narrow-focus-11665707545" target="_blank" rel="noreferrer noopener">the Wall Street Journal reported</a>.&nbsp;</p>



<p>The reported cuts come after the company <a href="https://cms.blockworks.co/nydig-closes-1b-funding-round-raising-valuation-above-7b/" target="_blank" rel="noreferrer noopener">completed a $1 billion funding round</a> at a roughly&nbsp; $7 billion valuation last December, and more recently, <a href="https://cms.blockworks.co/nydig-raises-720m-for-institutional-bitcoin-fund/" target="_blank" rel="noreferrer noopener">raised $720 million for its institutional bitcoin fund</a>.&nbsp;</p>



<p>An NYDIG spokesperson did not immediately return a request for comment.</p>



<p>While some crypto companies continue to cut staff, <strong>Anchorage Digital </strong>is increasing headcount. The crypto platform hired <a href="https://www.linkedin.com/in/cjjouhal/" target="_blank" rel="noreferrer noopener"><strong>CJ Jouhal</strong></a> as its head of engineering as the company continues its hiring spree despite the crypto market.&nbsp;</p>



<p>Jouhal, a former chief technology officer at tech company Clear, <a href="https://cms.blockworks.co/anchorage-digitals-new-engineering-head-focused-on-scaling-team-security/" target="_blank" rel="noreferrer noopener">told Blockworks</a> that he is focused on continuing to scale Anchorage’s team. The company is on track to triple the size of its engineering team this year.</p>



<hr class="wp-block-separator">
<p><strong>Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>
<br>
<p><strong>Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.</strong></p>
<br>
<p><strong>Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.</strong></p>
<hr class="wp-block-separator">


Latest in Crypto Hiring: Kraken, dYdX Foundation and BlockFi Add Execs

Casey Wagner

<div id="highlights-block_62f53be681016" class="highlights">
        <ul>
                <li>DEX dYdX said many accounts have been blocked due to associations with Tornado Cash, but it hope to spare those unfairly targeted</li>
                <li>The news comes after Circle and its USDC launch partner, Coinbase, blocked the movement of USDC to sanctioned addresses</li>
            </ul>
    
</div>



<p>In accordance with federal sanctions regulations, decentralized crypto exchange dYdX said it has begun blocking users that have interacted with Tornado Cash, but the dYdX team is attempting to protect unfairly targeted traders.&nbsp;</p>



<p>For example, if a trader purchases a bitcoin that previously had been funneled through Tornado Cash by another party, that dYdX customer could have been — unfairly, in the exchange’s eyes — blacklisted without warning. That would have been true even if the trader had never personally used the mixer.</p>



<p>The Office of Foreign Asset Control <a href="https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808" target="_blank" rel="noreferrer noopener">added Tornado Cash</a> and <a href="https://cms.blockworks.co/treasurys-tornado-cash-sanctions-have-companies-stepping-back-from-users/" target="_blank" rel="noreferrer noopener">45 related Ethereum</a> wallet addresses to the Specially Designated Nationals (SDN) list Monday, alleging North Korea-backed hacker collective <a href="https://cms.blockworks.co/us-treasury-sanctions-first-crypto-mixing-service-following-record-hack/" target="_blank" rel="noreferrer noopener">Lazarus Group</a> used the service to launder more than $455 million in stolen crypto.</p>



<p>“We were recently made aware of an issue related to Tornado that was causing many wallet addresses to be blocked from accessing our exchange,” dYdX <a href="https://twitter.com/dYdX/status/1557483063231164416?s=20&amp;t=KU9f8L_35O8JSt5kncbHhw" target="_blank" rel="noreferrer noopener">tweeted</a>. “We have rectified this.” </p>



<p>The exchange uses “compliance vendors to scan and flag accounts” with funds associated with illicit activity, including Tornado Cash, dYdX wrote in a <a href="https://dydx.exchange/blog/tornado-outage" target="_blank" rel="noreferrer noopener">blog</a> post.</p>



<p>“Many accounts were blocked because a certain portion of the wallet’s funds (in many cases, even immaterial amounts) were associated at some time with Tornado Cash,” dYdX wrote. “This…affected many account holders that never directly engaged with Tornado Cash, and often such users do not realize the origin of the funds transferred to them during various transactions prior to interacting with our platform, but we must nevertheless maintain certain restrictions.”</p>



<p>DYdX has since amended the list of blocked users, opting to unban an undisclosed number. The team urged users who feel they have been unfairly targeted to contact the exchange.&nbsp;</p>



<p>The development comes after Circle and its USDC launch partner, Coinbase, <a href="https://cms.blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel/" target="_blank" rel="noreferrer noopener">blocked</a> the flow of USDC to sanctioned addresses. It’s a move Circle co-founder Jeremy Allair said he expects other companies will follow, given the 30-year prison sentence that can come with not abiding by sanctions laws.</p>



<p>The situation “raises extraordinary questions about privacy and security on the internet, and the future of public internet digital currency,” Allair <a href="https://twitter.com/jerallaire/status/1557004772166737920?s=20&amp;t=pIZzCE2Jo4z7Zp7UeR3RmQ" target="_blank" rel="noreferrer noopener">tweeted</a>. </p>



<p>DYdX, built on Ethereum, <a href="https://dydx.exchange/blog/dydx-chain" target="_blank" rel="noreferrer noopener">said</a> in June it would move to a standalone blockchain based on the Cosmos SDK and Tendermint proof-of-stake consensus. The new version, expected to launch by year-end, would promote greater decentralization and scalability, the team said. </p>



<p>A spokesperson for the company declined to comment.</p>



<hr class="wp-block-separator">
<p><strong>Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>
<br>
<p><strong>Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.</strong></p>
<br>
<p><strong>Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.</strong></p>
<hr class="wp-block-separator">


DYdX Attempts To Spare Users Unfairly Targeted by Tornado Cash Sanctions

Michael Bodley

<div id="highlights-block_62c5d532d5f62" class="highlights">
        <ul>
                <li>The buy-in is $2,500 worth of the stablecoin USDC</li>
                <li>The DEX also plans to hold a series of Twitter Spaces to clue the public in on how the best traders “think about market moves,” an executive told Blockworks</li>
            </ul>
    
</div>



<p>Decentralized exchange dYdX Trading on Wednesday kicked off its first trading competition on the cryptocurrency protocol — aiming to pit an influencer against a trader with their money, quite literally, where their mouth is.</p>



<p>Competitors must buy in with $2,500 worth of the stablecoin USDC, an amount they receive back&nbsp; — along with any profits made — after the event. There are also exclusive non-fungible tokens (NFTs) and cash prizes, denominated in stablecoins.</p>



<p>The growth lead of the decentralized exchange (DEX), Corey Miller, told Blockworks a lot of traders hype up their ability to derive alpha via Telegram groups and Twitter, but there’s not necessarily a public “good way to objectively measure how well people perform.”</p>



<p>Rankings for the savviest traders will be measured both in dollars won and lost and percentage gains and dips. The latter is a bid to eliminate whales coming in and parking their voluminous assets in safe plays to generate medium yield on a large amount of cryptocurrency.&nbsp;</p>



<p>The idea is for participants to test their mettle across a wide range of liquid cryptocurrencies, including DeFi digital assets.&nbsp;</p>



<p>The DEX also plans to hold a series of Twitter Spaces to clue the public in on how the best traders “think about market moves,” as well as delve into relevant macro topics.&nbsp;</p>



<p>The launch comes as crypto markets continue to wobble, having lost trillions of dollars in market capitalization since their record highs, following the demise of Terra stablecoin UST and, more recently, the collapse of insolvent crypto lenders, including Celsius and Voyager.</p>



<p>An argument can be made, however, that traders — and especially those of the retail variety — now more than ever are hungry for access to reputable information.&nbsp;</p>



<p>The team — which has been adding staffers, even as a number of high-profile crypto companies have been forced to make steep cuts — has an iPhone app and is now working on an Android sister product. The end goal is to make the experience of buying and selling digital assets on dYdX as seamless for traders as it is logging on to centralized exchanges such as Coinbase and executing a transaction.</p>



<p>Though DEXs have come a long way in terms of usability and accessibility, industry participants say, in the murky, difficult-to-understand world of DeFi (decentralized finance), there’s still much work to be done.&nbsp;</p>



<p>Despite the market downturn, though, Miller said he’s optimistic DeFi is here to stay. </p>



<p>“How does DeFi win?,” he asked. “It’s about creating a product people will actually want to use.”</p>



<p>The exchange also has its own DAO, complete with a native governance token that dictates how the DAO (decentralized autonomous organization) operates on a day-to-day basis.&nbsp;</p>



<p>On the whole, DEXs such as dYdX have cut into the trading volumes of centralized titans, including Coinbase and Kraken, in a notable way. But, in Miller&#8217;s mind, the “most likely scenario is that the two coexist for a while.” And some DEXs have lower fees than centralized market makers — another potential boon to traders.</p>



<p>The team is also working on the next iteration of its native protocol, an endeavor expected to take six months or so that would, ideally, result in a completely decentralized platform, with the company largely taking a back seat to the community.</p>



<hr class="wp-block-separator">
<p><strong>Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>
<br>
<p><strong>Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.</strong></p>
<br>
<p><strong>Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.</strong></p>
<hr class="wp-block-separator">


Decentralized Crypto Exchange Kicks Off Contest in Pursuit of Real Alpha

Jocelyn Yang

<div id="highlights-block_62b361ebaefe1" class="highlights">
        <ul>
                <li>The goal for dYdX V4 is to have high throughput for the order book while remaining decentralized, the company said</li>
                <li>DYdX is positioning itself as the largest decentralized derivatives exchange, with more than $690 million in trading volume in the past 24 hours</li>
            </ul>
    
</div>



<p>A crypto derivatives platform based on Ethereum layer-2 blockchains is developing its own blockchain.</p>



<p>The new product from dYdX plans to be based on Cosmos, using Tendermint’s proof-of-stake consensus protocol to validate transactions. Layer-2 protocols are built on top of popular blockchains, such as Ethereum and Bitcoin, and are typically used to increase efficiencies, add features and scale the technology.&nbsp;</p>



<p>The game plan for dYdX V4 — the exchange <a href="https://dydx.exchange/blog/v4-full-decentralization" target="_blank" rel="noreferrer noopener">laid out</a> by the company in January — is to be fully decentralized by the end of the year.&nbsp;</p>



<p>“Developing a decentralized, off-chain order book and matching engine and moving from Ethereum to a dYdX-specific chain as a major [decentralized finance] protocol is very much untested, but we believe it gives the dYdX ecosystem the best shot at having a network that could offer a long term competitive product experience with centralized exchanges,” the company said in a statement.&nbsp;</p>



<p>Founded in 2017 by ex-Coinbase and Uber engineer Antonio Juliano, dYdX is positioning itself as the largest decentralized derivatives exchange — with more than $690 million in trading volume in the past 24 hours, according to <a href="https://www.coingecko.com/en/exchanges/dydx_perpetual" target="_blank" rel="noreferrer noopener">CoinGecko</a> data.&nbsp;</p>



<p>The company noted the existing dYdX product processes at about 10 trades per second and about 1,000 order placements/cancellations per second.</p>



<p>In the company&#8217;s vision for dYdX V4, each validator will “run an in-memory orderbook that is never committed to consensus” such as off-chain. Meanwhile, on a real time basis, “orders will be matched together by the network. The resulting trades are then committed on-chain each block.”&nbsp;</p>



<p>A spokesperson for the company didn’t immediately return a request for comment.</p>



<p>In August 2020, dYdX <a href="https://integral.dydx.exchange/scaling-with-starkware/" target="_blank" rel="noreferrer noopener">partnered</a> with StarkWare to scale decentralized trading. The company <a href="https://cms.blockworks.co/paradigm-leads-65m-round-for-decentralized-exchange-dydx/" target="_blank" rel="noreferrer noopener">raised</a> $65 million in a Series C funding round in June 2021 led by Paradigm.</p>



<hr class="wp-block-separator">
<p><strong>Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>
<br>
<p><strong>Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.</strong></p>
<br>
<p><strong>Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.</strong></p>
<hr class="wp-block-separator">


Decentralized Exchange DYdX To Build Its Own Blockchain

Jacquelyn Melinek

<div id="highlights-block_61927fa6e348a" class="highlights">
        <ul>
                <li>“This new fund and its size are reflective of crypto being the most exciting frontier in technology,” the co-founders said </li>
                <li>The firm’s portfolio includes 40 different investments to date, such as companies like Uniswap, FTX, Fireblocks, BlockFi and Matrixport, according to its website</li>
            </ul>
    
</div>



<p>Crypto-focused investment firm Paradigm is launching a new $2.5 billion venture fund, Matt Huang and Fred Ehrsam, the company’s co-founders and managing partners, announced on Monday.&nbsp;</p>



<p>The investment will be used to “continue investing in the next generation of crypto companies and protocols.” The fund will also operate alongside Paradigm’s existing flagship fund, the co-founders said.</p>



<p>“This new fund and its size are reflective of crypto being the most exciting frontier in technology. Over the past decade, crypto has come a long way. But cryptocurrencies are still owned by less than ten percent of the global population,” Huang and Ehrsam wrote in a blog <a href="https://www.paradigm.xyz/2021/11/paradigms-new-venture-fund/" target="_blank" rel="noreferrer noopener">post</a>.&nbsp;</p>



<p>“The journey is just beginning, and the potential of crypto has never been more clear,” they added.</p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="512" height="341" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg" alt="" class="wp-image-11150" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /><figcaption>Fred Ehrsam and Matt Huang; Source: Paradigm</figcaption></figure></div>



<p>The company declined to provide additional comments beyond the blog post when requested by Blockworks on Monday.</p>



<p>In recent months, the firm has led token sales and investment rounds for automated market maker <a href="https://cms.blockworks.co/osmosis-closes-21m-token-sale-led-by-paradigm/" target="_blank" rel="noreferrer noopener">Osmosis</a> and decentralized derivatives exchange company, <a href="https://cms.blockworks.co/paradigm-leads-65m-round-for-decentralized-exchange-dydx/" target="_blank" rel="noreferrer noopener">dYdX</a>, Blockworks previously reported.&nbsp;</p>



<p>Paradigm invests in crypto companies, protocols, and currencies from early stage to late-stage and stages in between.</p>



<p>The firm’s portfolio also includes 40 different investments to date such as companies like Uniswap, FTX, Fireblocks, BlockFi and Matrixport, according to its <a href="https://www.paradigm.xyz/portfolio/">website</a>.</p>



<hr class="wp-block-separator"/>



<p><strong>Get the day’s top crypto news and insights delivered to your inbox every evening. <a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a> now.</strong></p>



<hr class="wp-block-separator"/>


Paradigm Launches $2.5 Billion Crypto Fund

Sam Martin

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>The SEC posted an investors bulletin on bitcoin futures</li>
                <li>Coinbase launched its digital asset policy proposal on GitHub</li>
            </ul>
    
</div>



<h3>Markets Wrap Highlights</h3>



<p>A futures-backed bitcoin ETF appears to be on the cusp of US SEC approval. </p>



<p>Bitwise CIO makes the case for a spot bitcoin-backed ETF over a futures-backed ETF. </p>



<p>Implied volatility in the bitcoin options market signals a big move is afoot. </p>



<p>The regulatory environment continues to heat up, as Coinbase launches its digital asset policy proposal on GitHub. </p>



<p>Coinbase&#8217;s Ethereum NFT marketplace could bring in a shockingly large amount of capital. </p>



<p>Grayscale Bitcoin Trust (GBTC) continues to trade at a hefty discount to its net asset value (NAV). </p>



<p><strong>Latest in Macro:</strong></p>



<ul><li>S&amp;P 500: 4,438, +1.71%</li><li>NASDAQ: 14,823, +1.73%</li><li>Gold: $1,797, +.21%</li><li>WTI Crude Oil: $81.44, +1.23%</li><li>10-Year Treasury: 1.516%, -.033%</li></ul>



<p><strong>Latest in Crypto:</strong></p>



<ul><li>BTC: $57,542, +.64%</li><li>ETH: $3,775, +6.58%</li><li>ETH/BTC: .0654, +4.05%</li><li>BTC.D: 45.00%, -.37%</li></ul>



<h3>Bitcoin ETF</h3>



<p>Bitwise filed its second request for a bitcoin ETF, Blockworks <a href="https://cms.blockworks.co/bitwise-tries-once-more-for-spot-bitcoin-etp/" target="_blank" rel="noreferrer noopener">reported</a> earlier. Bitwise CIO Matt Hougan, took to <a href="https://twitter.com/Matt_Hougan/status/1448644459122475008?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> to break down three main reasons why the company thinks a spot bitcoin-backed ETF is better than its futures-backed ETF filing. </p>



<p>&#8220;A. Costs: It could cost over 5-10% per year to roll the futures (“contango”). Plus another 1-2% in fees.</p>



<p>B. Dilution: ETFs can&#8217;t hold 100% BTC futures due to rules. Most aim for 85%. So, 15% is other stuff, even bonds!</p>



<p>C. Tail risk: Remember USO (referring to when oil went negative) in 2020? Position limits, liquidity, etc — things can break.&#8221;</p>



<p>All of this comes hours before the SEC Investor Ed tweeted a <a href="https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/funds" target="_blank" rel="noreferrer noopener">link</a> explaining to investors what risks and benefits are associated with bitcoin futures: </p>



<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"><p lang="en" dir="ltr">Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits. <br><br>Check out our Investor Bulletin to learn more: <a href="https://t.co/AZbrkpfn8F">https://t.co/AZbrkpfn8F</a></p>&mdash; SEC Investor Ed (@SEC_Investor_Ed) <a href="https://twitter.com/SEC_Investor_Ed/status/1448710749921087488?ref_src=twsrc%5Etfw">October 14, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>So what does this mean for price? The options market is pricing in a big move before the end of the month, implying that traders expect volatility ahead of the ETF announcement. The below chart shows BTC ATM (At-the-Money) volatility term structure. Options are priced in part by their time value — i.e. the duration until expiration and the underlying assets implied volatility (IV). We can see the IV of ATM calls/puts is abnormally high over the next week or two. </p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="572" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg" alt="ETF" class="wp-image-9402" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Term-structure-@PelionCap-1024x572.jpg?w=1200 1200w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



<p>Anna Nikolayevsky, founder of Axel Capital and one of the leading women in hedge funds, has <a href="https://twitter.com/HedgeMind/status/1448714989997477888?s=20" target="_blank" rel="noreferrer noopener">bet 23%</a> of her portfolio in Grayscale Bitcoin Trust (GBTC) and Coinbase (COIN) as of September 30, 2021.</p>



<p>Many other big names endorsed crypto&#8217;s legitimacy today, such as <a href="https://markets.businessinsider.com/news/stocks/bitcoin-morgan-stanley-james-gorman-crypto-btc-3q-earnings-2021-10">Morgan Stanley&#8217;s CEO, James Gorman</a>, <a href="https://www.cnbc.com/2021/10/14/russias-putin-says-crypto-has-value-but-maybe-not-for-trading-oil.html" target="_blank" rel="noreferrer noopener">Vladimir Putin</a> and Billionaire <a href="https://www.cnbc.com/2021/10/13/billionaire-barry-sternlicht-explains-why-he-owns-bitcoin-and-ether.html" target="_blank" rel="noreferrer noopener">Barry Sternlicht</a>.</p>



<h3>Regulatory News</h3>



<p>Coinbase launched its digital asset policy proposal on <a href="https://github.com/coinbase/digital-asset-policy-proposal" target="_blank" rel="noreferrer noopener">GitHub</a>, a library for open source code and proposals, in an attempt to open the conversation up to the rest of the community and educate policy makers, Blockworks previously <a href="https://cms.blockworks.co/coinbase-proposes-digital-asset-policy-to-help-chart-regulatory-course/" target="_blank" rel="noreferrer noopener">reported</a>. The separate proposed framework would be guided by three goals of enhancing transparency, disclosing requirements and protecting users against fraud and market manipulation</p>



<p>Sir Jon Cunliffe, the Bank of England Deputy Governor for&nbsp;<a href="https://www.bbc.co.uk/news/business-58906109" target="_blank" rel="noreferrer noopener">financial stability</a>, has called for cryptocurrencies to be regulated as a matter of urgency. In addition, he warned that a massive crypto market crash could be a realistic scenario.</p>



<p>“The calls for more regulation in digital asset investments are, in principle, a much welcome sign of the broadening adoption of these assets. Careful and sensible regulation could indeed support the move of smart money into the space and reduce the volatility of crypto in general,&#8221; Mikkel Morch, executive director and risk management at ARK36 wrote to Blockworks. &#8220;On the other hand, rushed regulation is rarely good regulation. It is therefore of potential concern that Sir Jon Cunliffe calls regulating crypto a &#8220;matter of urgency&#8221;.</p>



<p>Former acting comptroller of the currency at USOCC, Brian Brooks, took to <a href="https://twitter.com/BrianBrooksUS/status/1448642723867766788?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> to say, &#8220;Regulation should be nondiscriminatory. Bank lending shouldn’t be favored over DeFi lending. Traditional securities shouldn’t be favored over decentralized tokens. Exchanges shouldn’t be favored over DEXs. Etc.&#8221;</p>



<h3>Non-Fungible Tokens (NFTs)</h3>



<p>As of 3:41 pm ET, Coinbase&#8217;s Ethereum NFT marketplace has more than 1.58 million users on the waitlist. That is nearly triple the number of users on OpenSea. In a hypothetical scenario where the average user spends $1,000 on NFTs, that would amount to $1.58 billion of fresh liquidity. For context, the market cap of all Solana NFTs is $825 million according to Solanalysis. </p>



<p>Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found in the photos below:</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="351" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png" alt="" class="wp-image-9405" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.02-PM-1024x351.png?w=1239 1239w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="292" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png" alt="" class="wp-image-9406" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.46.08-PM-1024x292.png?w=1233 1233w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure>



<h3>Grayscale Bitcoin Trust (GBTC)</h3>



<ul><li>GBTC, a trust that holds BTC on behalf of investors and charges an annual fee, has been trading at a discount to their net asset value (NAV) for roughly seven months now.</li><li>GBTC is different than an ETF because there are no authorized participants that reconcile the portfolio when underlying asset prices fluctuate. </li><li>Because GBTC is a closed-end fund, investors can get &#8216;cheap&#8217; exposure to bitcoin by buying it at a discount to NAV. However, it is worth noting that with an ETF approval looming, the discount could widen further for various reasons. </li></ul>



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="815" height="243" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png" alt="ETF" class="wp-image-9407" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=815 815w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-14-at-3.48.10-PM.png?w=80 80w" sizes="(max-width: 815px) 100vw, 815px" /><figcaption>Source: https://ycharts.com/companies/GBTC/discount_or_premium_to_nav</figcaption></figure></div>



<h3>Other Notable News</h3>



<ul><li>dYdX cumulative volume has surpassed <a href="https://twitter.com/dydxprotocol/status/1448415526133407745?s=20" target="_blank" rel="noreferrer noopener">$100 billion</a>. </li><li>Good resources on Ethereum scaling solutions can be found <a href="https://www.argent.xyz/learn/the-best-resources-on-ethereum-scaling/" target="_blank" rel="noreferrer noopener">here</a>. </li><li>There is now over <a href="https://twitter.com/hexonaut/status/1448627151176089600?s=20" target="_blank" rel="noreferrer noopener">$7 billion DAI,</a> the native stablecoin to Maker Protocol, in circulation.</li><li>Jack Mallers announced <a href="https://jimmymow.medium.com/announcing-pay-me-in-bitcoin-455f4fa0a0e4" target="_blank" rel="noreferrer noopener">&#8216;Pay Me In Bitcoin&#8217;</a>.</li></ul>



<p>That is all for today, folks. Let&#8217;s do this again at the same time tomorrow. </p>



<hr class="wp-block-separator"/>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>



<hr class="wp-block-separator"/>


Options Traders Pay Hefty Premiums, Take Positions Ahead of ETF Decision: Markets Wrap

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>Bitcoin surges on positive remarks from Jerome Powell; $47 million of short positions liquidated</li>
                <li>Not your key, not your coins: hackers exploit Coinbase MFA flaw to steal from 6,000 customers</li>
            </ul>
    
</div>



<p>Digital assets were up big across the board Friday with equities following suit. </p>



<p>The UK joins China in a <a href="https://www.reuters.com/business/energy/european-gas-prices-hit-all-time-highs-russian-flows-slump-2021-10-01/" target="_blank" rel="noreferrer noopener">power crisis</a>, setting the stage for European gas prices to hit all-time highs.</p>



<p></p>



<h3>DeFi/NFTs/Gaming</h3>



<ul><li>Borrowing and lending protocol, Compound, experienced a bug in a recent update which sent users nearly $90 million in crypto by error. Leaders in the Compound community took to <a href="https://twitter.com/rleshner/status/1443730726751506432?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> to beg for the money back, even threatening reporting wallet addresses to the IRS.</li><li>The Biden administration is <a href="https://www.wsj.com/articles/biden-administration-seeks-to-regulate-stablecoin-issuers-as-banks-11633103156" target="_blank" rel="noreferrer noopener">considering</a> ways it can impose bank-like regulations on stablecoins to avoid any systemic risk they may cause if left unregulated. </li><li>Axie Infinity&#8217;s governance token, $AXS, surges to an all time high as <a href="https://cms.blockworks.co/axie-infinity-rolls-out-staking-program-shakes-up-gaming-business-model/" target="_blank" rel="noreferrer noopener">airdrops conclude and staking is announced</a>. $AXS broke $111 for the first time as of this writing. </li></ul>



<h3>TradFi</h3>



<ul id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li><a href="https://www.washingtonpost.com/us-policy/2021/10/01/white-house-debt-ceiling/" target="_blank" rel="noreferrer noopener">Memos</a> from within the White House seriously exploring the possibility of &#8216;minting the coin&#8217; to avoid breaching the debt ceiling. </li><li>OPEC members <a href="https://twitter.com/DeItaone/status/1443928970588721168?s=20" target="_blank" rel="noreferrer noopener">say</a> the world needs more investment in oil and gas and that the current energy crises should be a &#8216;wake-up-call&#8217; for the world.</li><li>The <a href="https://www.atlantafed.org/cqer/research/gdpnow" target="_blank" rel="noreferrer noopener">Atlanta Fed</a> has revised its Q3 real US GDP estimate to 2.3%, down from 6.0% in the beginning of August. </li></ul>



<h3>Insight</h3>



<p>&#8220;Right now if I take a step back and put on my &#8216;I&#8217;m a 2-year-old&#8217; hat, the communists (China) are trying to make housing more affordable and they are trying to let capital markets work and let somebody (Evergrande) take a loss to learn a lesson. And the capitalists (America) are doing the exact opposite. We are trying to make housing as expensive as we can and build as much political fragmentation in our society over it as possible.&#8221; </p>



<p>-Luke Gromen in regards to the Evergrande situation on <a href="https://www.theinvestorspodcast.com/bitcoin-fundamentals/luke-gromen-on-china-evergrande-macro-bitcoin/" target="_blank" rel="noreferrer noopener">Bitcoin Fundamentals podcast Episode:045</a></p>



<h3>Bitcoin</h3>



<p>Supply held by long-term-holders, or supply held for longer than 155 days, is at an all-time high as Bitcoin surges </p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="571" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg" alt="" class="wp-image-8882" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=468 468w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/LTH-BTC-1024x571.jpg?w=1352 1352w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Glassnode</figcaption></figure></div>



<h3>Other Top Crypto Movers</h3>



<ul><li>$DYDX is one of the biggest losers today, down 8.5% to $21.30 after a spectacular run earlier this week</li><li>$LUNA is also trailing the market today, last trading near unchanged at $37.95 despite the market wide run up</li><li>$AXS is by far the biggest winner today, up 54% to $111. Check out the <a href="https://stake.axieinfinity.com" target="_blank" rel="noreferrer noopener">staking dashboard</a> and the <a href="https://explorer.roninchain.com/address/ronin:a99cacd1427f493a95b585a5c7989a08c86a616b" target="_blank" rel="noreferrer noopener">community treasury</a></li></ul>



<h3>Currencies</h3>



<ul><li>The DXY index dropped -0.19%, according to MarketWatch.</li></ul>



<h3>Commodities</h3>



<ul id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>The November gas price at the Dutch TTF hub, a European benchmark, hit an all time high of 100 Euros per megawatt hour, according to Reuters.</li></ul>



<h3>In other news&#8230;</h3>



<p><a href="https://techcrunch.com/2021/09/22/coinbase-to-propose-a-federal-regulatory-framework-for-crypto-to-u-s-officials-within-the-next-month/?tpcc=ECTW2020" target="_blank" rel="noreferrer noopener">Brian Armstrong</a> announced that he has met with more than 30 crypto firms, 25 members of congress and/or staff, four major law firms, and three trade groups about regulatory proposals for the industry. </p>



<p><a href="https://twitter.com/DeItaone/status/1443973168151023618?s=20" target="_blank" rel="noreferrer noopener">G</a><a href="https://twitter.com/DeItaone/status/1443973168151023618?s=20">M</a> plans to launch at least 20 new electric vehicles in North America by 2028. Many subject matter experts believe this could put severe supply pressure on the precious metals used in EVs. </p>



<p><a href="https://twitter.com/BitcoinMagazine/status/1443880967572164623?s=20">E</a><a href="https://twitter.com/BitcoinMagazine/status/1443880967572164623?s=20" target="_blank" rel="noreferrer noopener">l Salvador</a> has mined their first Bitcoin blocks using geothermal heat from volcanos to power miners.</p>



<p>That&#8217;s all for this week, folks. See you all back here on Monday!</p>



<hr class="wp-block-separator"/>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>



<hr class="wp-block-separator"/>


Bitcoin Showing Strength; Global Energy Shortages Persist: Markets Wrap

Sam Reynolds

<div id="highlights-block_61571038f6627" class="highlights">
        <ul>
                <li>Layer-2’s resolve a massive pain point with Ethereum, but with that comes a centralization trade-off</li>
                <li>Are the savings on gas fees compared with mainnet Ethereum a sufficient Faustian bargain?</li>
            </ul>
    
</div>



<p>The decentralized spot and futures trading app dYdX once required prospective traders to deposit $10,000 to get started. This was just to cover the gas fees involved in trading on the decentralized exchange. Unlike a centralized exchange (CEX), DEXs don’t live on servers. Instead, they exist as a series of smart contracts on a blockchain.&nbsp;</p>



<p>While this means that there’s not the same overhead as a centralized exchange (consider that Coinbase employes close to 1000 people) for most of the past year each transaction comes at a higher cost given the complexity of the contract execution on Ethereum and the demand for blockspace.&nbsp;</p>



<p>DEXs have been around for about three and a half years since the launch of the Bancor Network in April 2018, followed by the original version of Uniswap on November 2, 2018. In crypto-land that’s comparable to a decade. The launch of dYdX — which is typically written in like this, inspired by the derivative function in calculus — changed the adoption equation by providing trading infrastructure that’s quite usable and similar to a CEX, explains Dragonfly Capital’s Haseeb Qureshi. </p>



<p>“We always believed it was a matter of time until decentralized perpetuals took off, and dYdX has really shown that the big thing standing in the way was an incentive for traders to onboard (to solve the cold-start liquidity problem) and just having a good enough fully-fledged trading experience that mimics CeFi,” Qureshi told Blockworks by email, explaining his firm’s investment thesis.&nbsp;</p>



<p>But this is also a double-edged sword. The market enthusiasm for dYdX made it prohibitively expensive, with Ethereum gas fees shooting up into the stratosphere as the market crowded in to trade on its crowded pipes.&nbsp;</p>



<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"><p lang="en" dir="ltr">And today, dYdX is doing more trade volume than every other DEX combined 🤯 <a href="https://t.co/7XDc7D7D0E">pic.twitter.com/7XDc7D7D0E</a></p>&mdash; Antonio | dYdX 🦔 (@AntonioMJuliano) <a href="https://twitter.com/AntonioMJuliano/status/1442470476534583304?ref_src=twsrc%5Etfw">September 27, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Part of the problem comes from how congested the <a href="https://cms.blockworks.co/bloombergs-mike-mcglone-on-ethereum-trends-and-the-digitalization-of-finance/" target="_blank" rel="noreferrer noopener">Ethereum network</a> has become. The <a href="https://cms.blockworks.co/ethereum-steps-up-as-rails-for-new-capital-markets/" target="_blank" rel="noreferrer noopener">future of finance may well be on Ethereum</a>, but as a result, its rails are currently a congested hot mess.&nbsp;</p>



<h3><strong>Layering and Scaling</strong></h3>



<p>The market has been evolving to fix this problem with scaling solutions that move transactions and computation off of the mainnet. Alternative layer-1 protocols tend to take a more centralized approach to boost transaction speed or accommodate more users and data thus bringing down costs. Examples of this are protocols like Polygon or Solana.</p>



<p>Another layer-1 method is sharding where the blockchain database is broken into smaller pieces, and thus makes it easier to process — the approach that Ethereum will take with its forthcoming 2.0 version next year. </p>



<p>In contrast, layer-2 solutions are apps or technology that operate on-top, or separately, from the blockchain allowing for transactions to occur in a sandbox before being placed back on-chain. One example of a layer-2 solution are sidechains, like Liquid, which allow peer-to-peer transactions on a separate chain before synchronizing them with the main blockchain. Optimistic <a href="https://ethereum.org/en/developers/docs/scaling/layer-2-rollups/" target="_blank" rel="noreferrer noopener">Rollups</a> debuted in recent months with the launch of Uniswap V3 on both <a href="https://offchainlabs.com/" target="_blank" rel="noreferrer noopener">Arbitrum</a> and <a href="https://www.optimism.io/" target="_blank" rel="noreferrer noopener">Optimism</a>. The latest method is Zero-Knowledge Rollups (shortened to ZK Rollups), which batch together transactions and then transforms them into a single settlement transaction on the Ethereum network.   </p>



<h3><strong>Starkware, how dYdX rolls&nbsp;</strong></h3>



<p>If DEXs are going to “rule crypto” as dYdX founder Antonio Juliano proclaimed earlier this year, keeping the status quo isn&#8217;t going to work — they need an alternative to compress thousands of trades into a small size to run on Ethereum more efficiently.</p>



<p>And with the adoption of ZK-rollups, thanks to Starkware’s layer-2 solution, the exchange is now open to the little fish and not just the big whales who can invest a minimum of $10,000.</p>



<blockquote class="wp-block-quote"><p><strong>“We like to think of Ethereum as this prime real estate you only use for displaying really expensive stuff. It’s like a display window on Fifth Avenue or something,” Starkware’s co-founder Eli Ben-Sasson told Blockworks in an interview.&nbsp;</strong></p></blockquote>



<p>But layer-2s currently have a centralization problem. After all, they rely on an outside operator to manage the transactions and send them back on-chain. </p>



<p>Starkware is well aware of this and is actively moving to develop <a href="https://medium.com/starkware/on-the-road-to-starknet-a-permissionless-stark-powered-l2-zk-rollup-83be53640880" target="_blank" rel="noreferrer noopener">Starknet</a> — a decentralized version of its ZK-Rollup mechanism, due out at the end of the year.&nbsp;</p>



<p>“Things like Starknet are going to be the manufacturing plant, producing a lot of the stuff that then gets displayed and curated on a layer-1,” Ben-Sasson said. </p>



<p>But does all of this take the <a href="https://cms.blockworks.co/qcp-capital-wary-of-ether-downside-as-china-mining-pools-shut/" target="_blank" rel="noreferrer noopener">“magic” out of Ethereum</a>, as research house Santiment argued in a recent note? Not the case, believes Ben-Sasson.&nbsp;&nbsp;</p>



<p>“I think that overall this would not decrease the value and usage of Ethereum, it&#8217;s the other way around,” he said. “Just like how you could move manufacturing facilities out of Manhattan or the center of London because you’re utilizing them for more expensive and important stuff.”</p>



<p>Ben-Sasson doesn’t think concerns over the centralization of layer-2s are as pressing of an issue as some might think, pointing out that if Starknet vanishes tomorrow, all the funds can be retrieved via a layer-1.</p>



<p>“Even though there was a central party running part of the system, the funds are always held in a non-custodial fashion, and you can revert to a layer-1 to get your funds back. But we’re not content with that. The path forward is decentralization,” Ben-Sasson concluded.</p>



<p>But decentralized or not, considering the uptick in volume over the last week — Dragonfly Capital’s Qureshi puts that on attractive token rewards and not a China exodus —  the market doesn’t seem to mind. After all, it is pushing through more volume than Coinbase. Maybe the future isn’t that decentralized?</p>


The Rise of DEXs Begins Move to Layer-2s Like Starkware

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>Evergrande woes continue as the company scrambles to reduce debt load</li>
                <li>Twitter&#8217;s head of consumer product marketing gives sneak peek of NFT integration</li>
            </ul>
    
</div>



<p>Today was all about choppy trading action in bonds, equities, cryptocurrencies and commodities. </p>



<p>Bitcoin and ethereum were both trading lower, notching small losses of 1.5% and 2.1% respectively, as of press time. </p>



<p>The Chinese real estate developer <meta charset="utf-8">Evergrande is offloading a 20% stake in Shengjing Bank, to raise $1.5 billion of the $305 billion it owes creditors, Blockworks <a href="https://cms.blockworks.co/evergrande-scrambles-to-reduce-debt/" target="_blank" rel="noreferrer noopener">reported</a> earlier today. </p>



<h3>DeFi</h3>



<ul><li>dYdX ($DYDX: $24.33) continues its impressive run as Total Value Locked (TVL) reaches $660 million.</li><li>Ethereum brings in $800 million in <a href="https://www.tokenterminal.com" target="_blank" rel="noreferrer noopener">protocol revenue</a>, or fees generated for token holders, over the last 30 days. </li><li>Ethereum sits at $120.72 billion in TVL.</li></ul>



<h3>Crypto</h3>



<ul id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li>Bitcoin is trading around $41,211.13, down 1.5% in 24 hours at 4:00 pm ET.</li><li>Ether is trading around $2,810.82, dropping 2.1% in 24 hours at 4:00 pm ET.</li><li>ETH:BTC is at 0.068, declining -0.07% at 4:00 pm ET.</li></ul>



<h3>Insight</h3>



<p><a href="https://smartfi.com/team-section/aaron-j-tilton">Aaron Tilton</a>, CEO at cryptocurrency platform SmartFi and former Utah state legislator, said, </p>



<p>“Ironically the SEC Chair enforcement approach reminds me of the earlier tactics the Chinese regulators had taken a few years ago by warning people that crypto must be re-made in an acceptable image of regulators for protection of the people, After all the &#8216;warnings&#8217; China made their own digital currency and outlawed private cryptocurrencies. The Congress, the SEC and crypto users should be engaging in proactive collaboration to serve the people, but it appears to be saber rattling warning the people to fall in line or else.”</p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="975" height="493" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg" alt="" class="wp-image-8763" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=975 975w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Image-9-29-21-at-4.04-PM.jpg?w=80 80w" sizes="(max-width: 975px) 100vw, 975px" /><figcaption>Total Crypto Market Cap (Source: <a href="https://www.tradingview.com/markets/cryptocurrencies/global-charts/">Trading View</a>)</figcaption></figure></div>



<p>All major Wall Street indices showed choppy trading during today&#8217;s session.</p>



<h3>Equities</h3>



<ul><li>The Dow rose 0.26% to 34,390.</li><li>S&amp;P 500 was up 0.16% to 4,359.</li><li>Nasdaq posted losses of -0.24% to 14,512.</li></ul>



<h3>Currencies</h3>



<ul><li>The US dollar rose 0.68%, according to the Bloomberg Dollar Spot Index.</li></ul>



<h3>Commodities</h3>



<ul id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>Brent crude was down to $78.34 per barrel, falling -0.95%.</li><li>Spot Gold fell -0.46% to $1,725.97.</li></ul>



<h3>Fixed Income</h3>



<ul><li>US 10-year treasury yields 1.522% as of 4:00 pm ET.</li></ul>



<h3>In other news&#8230;</h3>



<p>Twitter&#8217;s Justin Taylor, head of consumer product marketing, gave a sneak peek of what NFT verification for profile pictures could look like on Twitter.</p>



<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"><p lang="en" dir="ltr">Here’s a sneak peek👀 on what we’re working on for NFT profile verification.<br><br>What do you think? <a href="https://t.co/Z8c6tH3BBy">pic.twitter.com/Z8c6tH3BBy</a></p>&mdash; Justin Taylor (@TheSmarmyBum) <a href="https://twitter.com/TheSmarmyBum/status/1443259893411049475?ref_src=twsrc%5Etfw">September 29, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Ripple <a href="https://ripple.com/creatorfund?utm_source=twitter&amp;utm_medium=organic_social&amp;utm_campaign=launch" target="_blank" rel="noreferrer noopener">announced</a> today that they will be launching a $250 million creator fund to enable creators to explore new use cases for NFTs on top of $XRP.</p>



<p>Dapper Labs <a href="https://venturebeat.com/2021/09/29/dapper-labs-launches-nft-collectibles-with-nfl-and-nfl-players-association/" target="_blank" rel="noreferrer noopener">announced</a> a partnership with the NFL to create exclusive highlight NFTs for fans to collect.</p>



<p>Fed Chairman, Jerome Powell <a href="https://www.cnbc.com/2021/09/29/fed-chair-powell-calls-inflation-frustrating-and-sees-it-running-into-next-year.html?utm_term=Autofeed&amp;utm_medium=Social&amp;utm_content=Main&amp;utm_source=Twitter#Echobox=1632937633" target="_blank" rel="noreferrer noopener">called</a> inflation &#8216;frustrating&#8217; and sees it running into next year.</p>



<h3>We are looking out for</h3>



<ul><li>Federal Reserve Chairman Jerome Powell will discuss pandemic recovery on Friday.</li></ul>



<p>That&#8217;s it for today&#8217;s markets wrap. I&#8217;ll see you back here tomorrow.</p>



<hr class="wp-block-separator"/>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>



<hr class="wp-block-separator"/>


Crypto Markets Mostly Down; Equities Trade Sideways: Markets Wrap

<div id="highlights-block_60c8bc3552ba7" class="highlights">
        <ul>
                <li>The Series C round, along with three previous fundraising rounds, brings the company’s total funding raised to $87 million to date</li>
                <li>There are no current plans for additional fundraising and the company is not disclosing the valuation at this time</li>
            </ul>
    
</div>



<p>The decentralized derivatives exchange company, dYdX, has raised $65 million in a Series C funding round this month led by Paradigm, the company told Blockworks in an email.&nbsp;</p>



<p>Liquidity providers including QCP Capital, CMS Holdings, CMT Digital, Finlink Capital, Sixtant, Menai Financial Group, MGNR and Kronos Research participated as investors in the round.&nbsp;</p>



<p>Crypto venture capitals including HashKey, Electric Capital and Delphi Digital and dYdX’s partner StarkWare also joined the fundraising for this round. The Series C, along with three previous fundraising rounds, brings the company’s total funding raised to $87 million to date.</p>



<p>The San Francisco-based dYdX <a href="https://cms.blockworks.co/decentralized-exchange-dydx-raises-10m-for-product-growth-asian-expansion/" target="_blank" rel="noreferrer noopener">raised $10 million in Series B funding</a> co-led by Three Arrows Capital and DeFinance Capital in late January, Blockworks previously reported. dYdX also raised $10M in a Series A round co-led by a16z and Polychain Capital in July 2018 and $2M in a seed round co-led by Andreessen Horowitz and Polychain Capital in September 2017, the company said.&nbsp;</p>



<p>On June 15, dYdX’s <a href="https://dydx.exchange/blog/public" target="_blank" rel="noreferrer noopener">Layer 2 perpetual protocol</a> supported about $2.3 billion in cumulative volume from over 11,000 traders, <a href="https://metabase.dydx.exchange/public/dashboard/5fa0ea31-27f7-4cd2-8bb0-bc24473ccaa3" target="_blank" rel="noreferrer noopener">up almost 92%</a> from $1.2 billion cumulative volume on May 15, the month-ago date<strong>.</strong></p>



<p>Additionally, dYdX’s platform has an <a href="https://dydx.exchange/" target="_blank" rel="noreferrer noopener">all-time trading volume of $6.1 billion</a>, over 33,000 trades in the last 30 days and an open interest of $24.1 million in the past 24 hours alone.</p>



<p>There are no current plans for additional fundraising and the company is not disclosing the valuation at this time, it told Blockworks.&nbsp;</p>



<p>The company said it runs on audited smart contracts powered by ethereum, which eliminates the need to trust a central exchange while trading. “We combine the security and transparency of a decentralized exchange, with the speed and usability of a centralized exchange,” it added.&nbsp;</p>



<p>The additional capital will be used to do a handful of things including launch a mobile application, partner with infrastructure players to bridge the gap between centralized and decentralized and continue to invest in international growth markets such as Asia, the company said.&nbsp;</p>
