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Round Tripping

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Crypto Recaps

Round Tripping

a weekly recap of the crypto ecosystem

tolks
Aug 13, 2022
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Round Tripping

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as always, thanks for reading and follow me here

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tl;dr: the war on code and privacy, The Merge confirmed, another green week, the cost of being late to narratives (L2s this week), and ETH/macro continue the rally


BTC dominance 38% | ETH dominance 19.5% | DeFi TVL $67.5B |

Total Crypto Market Cap $1.22T | Stablecoin Supply $153B |


thoughts & notes:

Market Overview

charting inside DexGuru’s token terminal dashboard

Tokens pushed higher again this week as the month+ rally fueled by the merge narrative and a strong legacy market recovery continued. While it’s great to see another green week, crypto markets remain extremely correlated to macro markets and economic indicators. Markets continued their recent recovery across the board as U.S. inflation numbers came in lower than expected giving investors some renewed confidence in risk as the potential confluence of weakening inflation, a potentially averted recession, and the FED’s ability to orchestrate a soft landing increased this week (although the increase is small and liable to change as data does).

In crypto, ETH continued garnering strength ahead of the long awaited merge as BTC dominance ticks lower while the ETH/BTC ratio slowly climbs higher. ETH gained another ~15% this week and briefly wicked above 2k early this morning. Elsewhere, alternative L1s felt the downstream effects of ETH’s strength as AVAX (+19%), SOL (+15%), NEAR (+14%), and ATOM (+11%) enjoyed residual flows. AAVE (+9%) and LDO (+13) continued to pace the DeFi sector as (almost) the entire crypto ecosystem climbed higher on the back of ETH and legacy markets.

One sector that severely underperformed this week, and had massively outperformed in recent weeks, is OP, GMX, VELO, SNX, and others in the recent L2 meta narrative fueled rally. As you can see through the DexGuru token terminal shown above, OP and VELO’s underperformance jumps off the page. Being late to narratives and rotations in crypto is survivable, and sometimes even still profitable, in bull trending markets but can be extremely painful in other market environments such as now. The L2 underperformance this week is a good reminder that while the markets have rallied, it largely remains a PvP, fast rotation environment where market participants should remain risk averse, protective of their capital, and secure profits as narratives quickly collapse. Arriving late to the L2 rotation this week would not have only cost you the loss in OP, GMX, VELO, etc. but also the obvious miss of another 15% gain in ETH.

Tornado & Software Wars

While tokens continued rallying this week behind the confirmation of ETH’s merge date and macro strength, the enthusiasm was overshadowed by the start of what will likely be one of crypto’s most important fights. The fight for privacy online and surrounding financial transactions became paramount as the U.S. Treasury’s OFAC announced that it added Tornado Cash and numerous associated ETH addresses to their Specially Designated Nationals And Blocked Persons list.

While I’m neither a legal expert nor a developer or cryptographer, I strongly believe in financial privacy online, the precedent that supports and protects the publishing of open source autonomous code, and the importance of protecting tools and code that can be used for both good and bad. CoinCenter (donate to them!!) summarized the issue well in their most recent post saying,

“This is a first for OFAC, which typically sanctions people or companies. We have never seen autonomous decentralized code added to the list before. This is a hair-raising precedent that has already been followed by the deletion of open source code from hosting providers and the arrest of at least one developer.”

What’s unfortunately clear, is that this will be one of the most important battles the crypto industry has faced so far as we’re already beginning to see the downstream ramifications effecting protocol decisions and blacklists (USDC, dYdX, UNI, AAVE, BAL, Infura, MetaMask, POKT, etc.) reinforcing the need for more robust decentralized practices combined with constitutional protections of autonomous code.

Twitter avatar for @dystopiabreaker
suzuha ⚡🌙 @dystopiabreaker
hey, do you work in infosec? style yourself as a privacy defender and digital rights advocate? a cryptography tool (not company, cryptography itself) was just ruled illegal by administrative fiat. the developer of that cryptography was arrested seemingly merely for publishing it
9:13 PM ∙ Aug 12, 2022
520Likes93Retweets
Twitter avatar for @jchervinsky
Jake Chervinsky @jchervinsky
I've spent all week on the @TornadoCash sanctions & haven't heard a satisfying justification yet. The main argument is "criminals used it a lot." Okay, but they use everything law-abiding citizens do. Where's the line? How slippery is this slope? The uncertainty is a step back.
7:00 PM ∙ Aug 11, 2022
1,863Likes324Retweets

Goerli, Pandas, & The Merge

On a positive note, the merge is almost here. With the success of the Goerli testnet merge (and pandas appearing) on Wednesday, ETH core devs have announced the block in which ETH with officially transition the consensus mechanism from PoW to PoS. This transition is tentatively expected to occur on September 15th or 16th and depends on when the Total Terminal Difficulty (TTD) reaches a specific threshold dependent upon hashrate and difficulty factors that can introduce some small variance on the exact date and time. You can track when the TTD is expected to reach that threshold triggering the long awaited transition to PoS at bordel.wtf.

ETH’s strength against BTC continues; visualized in DexGuru’s token terminal

For more free content like this, along with weekly updates on the NFT and fungible ecosystem subscribe below and please share!

funding:

  • Messari, crypto data platform, plans to raise $35M @ $300M valuation

  • Spartan Labs spins out of Spartan Group with $100M to invent/launch products

  • LongHash Ventures announces new $100M fund

  • Lattice Capital raises $60M for its second crypto fund

  • Injective, $INJ Cosmos based DeFi chain, raises $40M

  • CreatorDAO, platform to provide capital/audience to creators, raises $20M

  • Pinata, decentralized NFT infrastructure provider, raises $21M seriesA/seed

  • Merkle Sciene, analytics platform focused on bridge security, raises $19M

  • Unstoppable Finance, DeFi wallet and web3 co-pilot, raises $12.8M

  • Lysto, web3 gaming verification platform, raises $12M

  • RISC Zero raises $12M to build zk proof based blockchain

  • Satellite IM, decentralized p2p communications network, raises $10.5M

  • Jito Labs, MEV mitigation infrastructure on SOL, raises $10M (s/o @0xEdgar)

  • Ansible Labs, payments platform for blockchain accounts, raises $7M

news:

  • BlackRock ($9T AUM) launches private trust for institutional investors to access spot BTC exposure; BlackRock said, “despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities.”

  • Reddit to launch Community Points on Arbitrum’s Nova in partnership with FTX

  • USDC’s Circle announces support for only ETH’s PoS asset in new blog post

  • Interactive Brokers, global broker ($IBKR), launches 24/7 crypto trading

  • FTX partners with Paradigm to launch one-click futures spreads trading

  • U.S. Treasury’s OFAC adds Tornado Cash and associated addresses to Specially Designed Nationals (SDN) list.

  • BTC miners continue selling to cover costs as XYZ structural selling pressure still in tact? leading to ETH/BTC ratio and ETH leading market????

tokens:

  • Arbitrum (token soon) launches access to Arbitrum Nova, a L2 chain optimized for gaming and social applications — FTX supporting “direct on-boarding”

  • Arweave (AR) launches suite of six new services/protocols, breakdown here

  • Immutable X (IMX) L2 support added natively into GameStop’s Wallet; NFT collection Worldwide Webb to launch season 1 on IMX

  • NEAR launches JavaScript enabled smart contracts SDK and rallies combined with announced Coinbase listing

  • REN introduces Ren 2.0, a multichain app protocol with EVM support

around the ecosystem:

  • Vitalik details his idea for extending zk-SNARKS to ERC-721 tokens (NFTs)

  • @caseykcaruso releases gasguzzlers.wtf, provides insights to gas consumption

  • OnChainWizard’s A Simple Guide to the ETH Merge

tweets:

Twitter avatar for @NeerajKA
Neeraj K. Agrawal @NeerajKA
In today's impromptu presentation on the Tornado Cash sanctions, @valkenburgh lays out the case that this is an unconstitutional restriction on freedom of speech. "We are looking right at the chilling effect" You can watch the whole thing here: youtube.com/watch?v=XpTrCA…
2:27 AM ∙ Aug 9, 2022
824Likes281Retweets
Twitter avatar for @PuffYatty
Puff @PuffYatty
investors be like:
Image
1:07 PM ∙ Aug 10, 2022
9,594Likes1,367Retweets
Twitter avatar for @screentimes
ciniz 👁 @screentimes
tornado cash dev arrested do kwon at home tweeting
3:30 PM ∙ Aug 12, 2022
9,235Likes1,516Retweets
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Round Tripping

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