Nickel Research Centre

Nickel News Roundup - Week 35

2nd September, 2021 

Market Overview:

The digital asset market continued to grow this week, with Ethereum and fellow smart contracts platform Solana providing particularly bullish performance

  • Bitcoin primarily traded within the $47,000 to $49,000 range this week, hitting a low of $46,460 before steady growth led to a high of $50,230 early on Thursday
  • Current values of $50,180 translate to 7.5% weekly growth
  • Ether grew significantly throughout the week, with especially strong performance on Wednesday as it broke through $3,500 for the first time since mid-May, before rising further to a weekly high of $3,837
  • A current value of $3,757 equates to 22% weekly growth for Ether, carrying on a recent weekly trend of double-digit growth
  • Solana, an altcoin backed by digital asset exchange FTX, experienced the most growth within the top 50; increasing 74.8% in value and rising to 8th in overall market capitalisation
  • The total value of all digital assets benefitted from widespread growth amongst smart contract platforms this week, growing over $200bn to a current value of $2.24tn—nearly tripling over the last 9 months
  • 94 of the top 100 digital assets by market capitalisation grew over the course of the week, with particularly strong growth from smart contract and NFT projects
  • Total value locked in DeFi crossed into nine figures this week, for a total of $105.2bn, driven by strong growth across Ethereum-backed protocols

Ether and smart contract platforms led the market this week, but Bitcoin also posted significant growth as it passed $50,000 again. This week witnessed several significant developments in terms of digital asset adoption on a national level, but businesses also moved to increase their integration of crypto, with a quick roll call this week featuring names like Standard Chartered, FOX, and Square, as well as ANZ, IBM, and Citi vying to provide CBDC services. NFTs can look back on a record-breaking period, as can other pillars of digital assets, such as wallets and exchanges.


What happened: Standard Chartered launches blockchain-based trade finance platform

How is this significant?
  • Standard Chartered bank this week announced the launch of Olea, a platform developed in collaboration with China’s LinkLogis, aimed at connecting institutional investors with trade finance opportunities through the growing field of digital assets
  • A report in the Korea Herald noted that Olea is positioned to give Standard Chartered an edge in “applicative solutions for banks seeking to digitally manage events and documentation tied to typical trade finance operations” 
  • Olea will be based in Singapore, and use blockchain to streamline efficiency and enhance transparency for institutions, with CEO Amelia Ng stating that their technology will “allow investors to understand their risk and manage their portfolio with greater confidence”
  • The company is scheduled to become fully operational before the end of 2021, with Ng saying they plan to launch regionally before going global; “Given the headquarters’ proximity to Asia, as well as the region being the world’s largest manufacturing region, Olea will initially focus on Asia and expand its geographic focus as the business grows”
  • Additionally, new broke on Wednesday that Standard Chartered has become the first bank to join the Patron Board of the Global Digital Finance Alliance
  • Standard Chartered’s Geoff Kot stated “We look forward to opportunities where we can collaborate with other global experts to support the adoption of digital assets as well as contribute, facilitate and lead the industry dialogue on digital assets standards”

What happened: Square announces development of a decentralised Bitcoin exchange

How is this significant?
  • Twitter co-founder, Square CEO, and noted Bitcoin advocate Jack Dorsey made another move aimed at promoting adoption of digital assets this week, announcing the creation of a decentralised exchange (aka DEX) for Bitcoin
  • The exchange will be created on an open platform developed by Square’s TBD unit, backing up Square’s positioning of Bitcoin as “the native currency of the internet”
  • Project lead Mike Brock tweeted “there are many projects to help make the internet more decentralized, our focus is solely on a sound global monetary system for all”
  • Brock believes that TBD’s exchange will “make it easy to fund a non-custodial wallet anywhere in the world through a platform to build on- and off-ramps into Bitcoin”
  • Currently, Bitcoin access is primarily driven through custodial apps and wallets such as those created by Coinbase and Square, which may be inaccessible to some due to geography
  • Whilst decentralised exchanges (trading platforms allowing users to transact directly from self-custodied digital wallets, rather than depositing funds on an exchange) are commonplace on the smart-contract-enabled Ethereum network, Bitcoin’s technological architecture has thus far prevented the creation of any successful Bitcoin DEXes
  • Additionally, reports also emerged this week that the latest Twitter beta build includes an option to “tip” Twitter users with Bitcoin, hinting at a potential future crypto payment integration on one of the world’s largest social networks

What happened: FOX media corporation participates in $100m digital asset Series A raise

How is this significant?
  • Mass media conglomerate FOX completed a $100m Series A funding round for crypto asset startup Eluvio, aimed at integrating non-fungible token (NFT) technology across a range of their entertainment IP
  • As a condition of the investment, Eluvio will serve as the technology provider for FOX’s recently-announced $100m NFT division and creative unit, known as Blockchain Creative Labs
  • In a press release announcing the investment, a representative from Blockchain Creative Labs commented “We believe there is great opportunity in tokenized media on the blockchain, which represents a new era in how technology and entertainment will drive one another forward”
  • Michelle Munson of Eluvio outlined some of the potential applications of the technology, identifying; “the ability of blockchain and 'smart' assets to fundamentally alter how digital entertainment is created, controlled, and distributed”

What happened: Gary Gensler declares crypto assets need regulation to survive

How is this significant?
  • SEC Chair Gary Gensler spoke to the Financial Times this week, acknowledging that digital assets have grown too big to ignore, and that as a result, the SEC will need to develop more regulatory frameworks
  • The lack of specific brokers in the world of DeFi (decentralised finance) does provide regulators with challenges in terms of whom to target for enforcement according to Gensler
  • Whilst he believes that most decentralised digital asset protocols aren’t 100% decentralised, he does acknowledge that they; “they are not as centralized as the New York Stock Exchange. It’s sort of an interesting thing that is in between”
  • Currently, the SEC and CFTC are viewed by several industry commentators as jostling for the lion’s share of regulatory authority over the new asset class; and two new bipartisan bills aimed at giving more regulatory power to the CFTC were proposed this week in order to preserve American competitiveness in the field

What happened: Digital assets gain popularity with Russian investors

How is this significant?
  • A new study commissioned by the Russian Association of Forex Dealers (AFD) was released this week, showcasing a growing enthusiasm for digital assets amongst Russian investors
  • Conducted across 502 respondents on a variety of trading and investing platforms, the results were optimistic about the potential of crypto assets, with 77% identifying them as the most “forward-looking” investment
  • In comparison, only about 9% identified gold as the best possible investment, and national currencies didn’t fare much better at 14% of respondents
  • 23% of respondents had never purchased or traded any digital assets, but of those, more than 77% planned to do so in the near future

What happened: Ethereum scaling solution raises $120m to become latest crypto “unicorn”

How is this significant?
  • On Tuesday, the Arbitrum Layer 2 scaling solution for Ethereum officially went live, alongside a press release that the technology’s developers, Offchain Labs, had raised $120m in a Series B funding round for a $1.2bn valuation
  • As blockchain adoption grows, scaling solutions for Ethereum become a more valued means of dealing with increased user demand—Arbitrum reduces load on the network by grouping transactions together in batches before broadcasting them to nodes, rather than sending each individually
  • Arbitrum was recently chosen by social news site Reddit (the 18th-most visited website in the world) as the scaling technology for integration of blockchain-based user rewards
  • Participants in the funding round included tech billionaire Mark Cuban, Pantera Capital, and Lightspeed Ventures

What happened: Web3 browser plugin Metamask reaches new user milestone

How is this significant?
  • Metamask, the most popular browser-based digital asset wallet for interaction with DeFi protocols (also known as “Web3” functionality) hit a new landmark for monthly active users in August
  • Buoyed by the launch of a mobile wallet, Metamask has now passed 10 million monthly active users, primarily operating in the field of DeFi
  • When compared to figures from the same period last year, user adoption has been dramatic. In July last year, the wallet had 545,000 users a month, equating to growth of around 1,800% in a year
  • User numbers were distributed globally, with the US, China, UK, Russia, Germany, India, France, and Turkey all featuring in the top 15 territories by usage

What happened: El Salvador legislature approves $150m Bitcoin Trust

How is this significant?
  • El Salvador, the first nation-state to officially adopt Bitcoin as legal tender, this week approved the creation of a Bitcoin Trust worth $150m aimed at facilitating conversions and boosting digital asset infrastructure
  • The trust will be run by the Development Bank of El Salvador, and allow merchants to instantly convert Bitcoin into dollars, for those wishing to offset risk from value fluctuations
  • Of the funds, around a third ($53.3m) have been designated for the installation of Bitcoin ATM infrastructure, and incentivisation of adoption for the government’s official “Chivo” Bitcoin wallet
  • Economic minister María Luisa Hayém Brevé recognised some uncertainty about the new asset class within the population, and stressed the government would spend on crypto education and incentives to foster adoption

What happened: Digital assets on eToro grow to 73% of platform’s trading commission

How is this significant?
  • Popular online trading platform eToro (valued at $10.4bn) this week revealed large-scale growth of digital asset trading by its customers, revealing that they accounted for nearly three-quarters of its trading commissions in Q2, compared with only 7% a year earlier
  • In a quarterly financial update, the company revealed that they collected $264 million in trading commissions, up over 2,250% year-on-year
  • CEO Yoni Assia was optimistic about a continuation of the trend in a letter to investors, writing “We have seen a pattern over time, with increased trading activity in a particular asset class or market influencing eToro's total commission in quarters or years. The rise in self-directed investing is a trend that is here to stay and eToro's growth is underpinned by long-term secular trends in investor behavior”

What happened: DEX aggregator 1inch enters Series B round on $2.2bn valuation

How is this significant?
  • Prominent DeFi platform 1inch, a website focused on finding the best current rates across a variety of DEXes, revealed this week that they have begun a Series B funding round that puts the company’s value at over $2bn
  • 1inch Network will use the funds to grow their team even further, with co-founder Sergej Kunz noting they have already grown from a team of 2 in 2019, to a current group of 65 contributors
  • Additionally, they will develop an offering aimed at institutional investors, with Kunz telling industry publication Coindesk that part of the motivation of the funding round is “looking for smart money and value add contributors to help us with our path forward with 1inch Pro, our institutional-grade, regulated product offering”

What happened: NFTs continue to gain public attention

How is this significant?
  • Several more pieces of news this week emerged about institutional adoption of NFTs, with a particular focus on arts and entertainment
  • Sotheby’s will be auctioning a collection of 101 randomly generated “profile picture” NFTs; a popular form of NFT in which character designs are created by smart contract from a selection of different visual components
  • Though newer than the famous “CryptoPunks” that were previously auctioned, the ape-themed avatars are estimated to sell for $12-$18m
  • Speaking of CryptoPunks—seen by many the original NFTs—the original developers of the collection were signed up by Hollywood entertainment agency United Talent Agency, to represent the NFTs as IP across film, TV, publishing, and licensing
  • In conjunction with digital asset exchange FTX, contemporary South Korean artist Jung Soo Kim physically burned and destroyed his work as he transitions them from physical pieces to NFTs
  • Singapore-based investment firm Three Arrows capital set a new record for the popular Art Blocks generative collection by purchasing a piece for $5.8m, and is currently setting up a $100m NFT art investment fund with a prominent NFT trader
  • Kim recognises the value of immutability that blockchain brings, telling industry publication CoinTelegraph that “It truly feels like blockchain is what I was waiting for. This is the next frontier for art, and I will convert all my existing work as NFTs”
  • In total, August witnessed approximately $2.3bn of NFT trading, dwarfing the previous monthly record of $315m

What happened: Nation-states continue digital asset development and integration

How is this significant?
  • In Singapore, the country’s monetary authority announced a shortlist of 15 finalists for their “Global CBDC Challenge” competition, aimed at solving all possible issues involved in the creation of a retail CBDC
  • Finalists include major banks like ANZ, Citi, HSBC, and Standard Chartered, as well as digital asset specialists such as Consensys, Giesecke, and even IBM
  • Hong Kong’s South China Morning Post reported a further expansion of Digital Yuan trial, involving usage on an industrial scale in insurance and funds, rather than the low-value retail usage that’s been studied thus far
  • On Thursday, Cuba’s central bank moved towards official acceptance of digital assets by publishing a resolution stating “Financial institutions and other legal entities may only use virtual assets among themselves and with natural persons to carry out monetary and mercantile operations, and exchange and swap transactions, as well as to satisfy pecuniary obligations”
  • The Korea Times reported that the country is establishing a bureau dedicated to digital assets, responsible for the issuance of licenses to exchanges and other businesses operating in the sector
  • In Slovenia, the national tax agency proposed a flat 10% tax for digital assets upon conversion to fiat currency, in order to simplify the taxation process

What happened: Bill Miller disclosed nearly $45m of digital asset investment

How is this significant?
  • According to a new filing with the SEC, billionaire fund manager Bill Miller has allocated 1.55% of his Miller Opportunity Trust value towards shares of Grayscale’s Bitcoin Trust
  • This equates to 1.5 million GBTC shares, worth $44.7m at current values
  • Miller has been an outspoken advocate of Bitcoin’s value proposition since at least January, calling digital assets a “suitable risk management strategy” in a climate of quantitative easing, and saying “There is no other asset with the combination of Bitcoin’s liquidity and upside potential”

What happened: Centre consortium makes several C-suite hires as interest in USDC grows

How is this significant?
  • Centre, the consortium created by USDC stablecoin issuers Circle and digital asset exchange Coinbase, made several significant hires recently as Circle moves towards its aims of being a fully regulated digital asset bank
  • New hires bring a wealth of experience from traditional finance, including:
  • Former PWC partner (and ex-Barclays, Standard Chartered, and Monetary Authority of Singapore) John Shipman as CCO
  • Beth Zolkind as CFO (a position she previously held at the Robin Hood Foundation)
  • Mark duBose as Chief Risk and Compliance Officer

What happened: Digital asset exchange registers record number of new users

How is this significant?
  • Kucoin, a leading digital asset exchange (top 5 by volume on spot trading) announced a 1144% increase in quarterly new user growth, as they added more than two million new users to the exchange in Q2 2021
  • This represents a year on year user growth of 709%, alongside daily transaction volumes of $4.3bn (a 791% yearly growth)
  • In terms of demographic breakdowns, Kucoin noted that the number of women using the exchange has tripled in the last 6 months, growing from a 12% total share of trades to 38%, demonstrating the growing appeal of digital assets
  • Kucoin has been a beneficiary of increased regulatory pressure on the leading exchange Binance, being more reliant on simple spot trading than derivatives products like futures
News Roundups