Round Tripping
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tl;dr: stablecoin growth as a key metric, NFTs are the legacy/adoption gateway, USDC & Circle’s upcoming CCTP, strong funding week, & announcement szn continues
BTC dominance 41% | ETH dominance 17.5% | DeFi TVL $48B |
Total Crypto Market Cap $1.1T | Stablecoin Supply $137.5B |
January comes to an end with another exciting, opportunity filled week in crypto as the total market cap slowly climbs higher on the back of BTC and ETH providing room for alts to accelerate higher. Canto and Aptos, for the second week in a row, were the largest beneficiaries as the era of web+ and short liquidations continues.
In macro land, U.S. GDP topped economists estimates growing by 2.9% in Q4 and the stock market continued its rally to start the year. This week, we could have some macro-induced volatility as the FED meets for FOMC starting on Tuesday with an expected 25 basis point rate hike Wednesday.
Sticking with the macro, crypto specific macro indicators are displaying growth in correlation with the recent broad market recovery, as DeFi TVL is showing signs of life approaching $50B up ~25% from the recent lows of sub $40B. More important than rehypothecated TVL, is the supply and inflows of stablecoins. Previously, I’ve written about their importance as a broad indicator to gauge market health, potential upside, and demand for crypto assets.
While the recent growth is minuscule compared previous rallies, we’re beginning to once again see the total supply of stables increase. To me, this highlights that the recent rally has been healthy and mostly fueled by a combination of shorts covering, technical indicators, and crypto native money which leaves room for upside from still sidelined fomo capital and exogenous demand.
On the topic of stablecoins, Jeremy Allaire, the CEO of USDC issuer Circle, tweeted this week that, “Circle’s Cross-Chain Transfer Protocol (CCTP) is getting closer to launch”. For those unfamiliar, CCTP is, “a premissionless on-chain utility that can burn native USDC on a source chain, and mint native USDC of the same amount on a destination chain” and allows developers to, “embed CCTP into their apps and provide users with the most capital efficient way to transfer USDC across chains.”
There are numerous benefits to the coming CCTP as it would eliminate the reliance on conventional “lock and mint” bridges for transferring USDC as they increase security risk and provide synthetic versions of USDC on other chains that result in fragmenting liquidity and increasing UX hurdles for users.
As mentioned, stables are the lifeblood of crypto enabling easy on/off ramps to the ecosystem along with the instant distribution/transfer of stable dollars across the world. Upon CCTP’s eventual launch, I’ll be watching the market’s reaction to the impact and potential liquidity drain on already live bridging protocols. USDC/any other chain’s native asset are usually the deepest liquidity pair and USDC is one of the most bridged assets, so monitoring their launch and adoption will be necessary.
Lastly, NFTs continue to be the bridge between legacy companies and the crypto world. Whether their launches are innovative and have lasting power is separate from the realization that the opportunities in NFT land will only increase. Building upon what I wrote last week, news came this week that Amazon is launching an NFT initiative in the spring. Amazon joins Shopify and Porsche this week in the always growing news sector of legacy company developing or expanding their NFT initiative.
Again, the specific impact and strategies legacy companies ultimately have is not the focus, rather that they consistently choose some form of distributing NFTs. Amazon adds to the examples of Nike, LVHM, Tiffany, professional sports leagues, Shopify, & countless others providing opportunities for market participants despite these legacy NFTs ultimate impact. In the short, mid, and long-term I expect this trend to continue and it’s worth reposting the chart from last week’s Round Tripping highlighting that 80% of wallets first transaction in 2022 were related to NFTs.
Wrapping up, other notable developments this week include:
GBTC’s discount — up to -40% (lmeow) from the lows of -50% a month ago
Wormhole exploiter converting $150M worth of ETH and levering up
Large funding announcements, mainly infrastructure related, as private markets become more active in correlation with the market recovery
ETH/BTC ratio (always) and if BTC continues leading the market
discussion & development around the “nascent NFT protocol” developing on BTC
Pumponomics/announcements continuing — GALA announcing changes to their tokenomics, DYDX pushing their unlock, MAGIC pumping through their unlock as they announce MagicSwap & INJ announcing their $150M ecosystem fund as projects look to capitalize on the market’s recent rally/engaged participants
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funding:
QuickNode, crypto infra & dev tool provider, raises $60M @ $800M valuation
Injective (INJ), PoS L1, announces $150M ecosystem fund to accelerate adoption
Blockstream, BTC miner & hosting provider, raises $125M
Mythical Games, last valued @ $1.25B, is eyeing a $50M raise while also launching an enhanced NFT-gaming marketplace
Spatial Labs, crypto infra improving metaverse & commerce, raises $10M seed
Calimero Network, infra & private sharding company, raises $8.5M seed
StoryCo, collaborative blockchain-based storytelling platform, raises $6M seed
Asset Reality, crypto asset recovery firm, raises $4.9M seed
Sui-based Ethos Wallet raises $4.2M seed
Tribes, crypto-native messaging & group wallet app, raises $3.3M pre-seed
Vest, futures perp DEX on Arbi, exits stealth & raises undisclosed seed round
news:
Amazon is launching a, “digital assets enterprise” including an NFT initiative expected in the spring with a focus on blockchain-based gaming and related NFT applications; examples include, “getting Amazon customers to play crypto games and claim free NFTs in the process”
Solana outlines dApp Store that ships inside SOL’s Saga mobile phone
Farcaster, decentralized social, available for beta testing inside the iOS app store
Virtu Financial reiterates their view of crypto as, “a long-term growth opportunity”
BlockFi selling $160M worth of BTC mining loans, previously redacted documents show BlockFi has $1.2B+ of assets tied up between FTX and Alameda
Fractal, SOL-based gaming asset platform, expands to MATIC
Goldman Sachs ranks BTC as the best performing asset of 2023
Shopify expands NFT integration to support minting and selling of AVAX NFTs
tokens & protocols:
DYDX — delays $282M investor token unlock from February to December
INJ — rallies behind announcement of $150M ecosystem fund
MKR — DAO votes to deposit $100M of USDC into YFI vault for yield
MAGIC — Treasure announces MagicSwap, an AMM with universal token compatibility that supports pools for ERC-20s & NFTs through single router
TON — to vote on suspending inactive addresses holding ~$2.5B of TON
GALA — embraces pumponomics outlining quarterly burn of 500M GALA
UNI — “temp check” vote passes with 80% in favor of deploying UNI v3 on BNB
AAVE — set to launch v3 of protocol supporting 7 assets after passing DAO vote
GNS — records $1.6B trading volume since launch of protocol on Arbi last month
MPL — launches KYC, accredited investor trade receivables liquidity pool
SUHSI — to launch DEX for perp trading on upcoming Sei Network chain
Starknet — announces development of open-source sequencer for ZK L2
around the ecosystem:
Cami with a detailed overview of account abstraction (AA)
Vitalik proposes and provides, “an incomplete guide to stealth addresses”
0xsmac with his usual list of topical reads
tweets:
